One more important thing to consider: while benefits are reduced if you earn over the limit before FRA, you actually get those reduced benefits back later. SSA recalculates your benefit amount when you reach FRA to account for months when benefits were withheld. So you're not permanently losing that money - it's more like a delay in receiving it. This is called the Adjustment to the Reduction Factor (ARF). The information in section 202(x) of the Social Security Handbook explains this recalculation. Your monthly benefit will increase starting at FRA to account for those months when you received reduced or no benefits due to excess earnings.

Just wanted to add from my own experience - make sure you understand the timing of when SSA actually processes these changes. When I retired mid-year, it took them several months to adjust my benefits for the monthly earnings test. I had to call multiple times to get it sorted out, and they had to do retroactive adjustments. The system isn't always quick to recognize when you've actually stopped working, so keep detailed records of your last day of work and be prepared to provide documentation if needed. Also, if you're planning to do any consulting or part-time work after you "retire," make sure you understand how that income gets counted too!

Thank you all so much for the helpful responses! This is much more complicated than I thought, but I understand better now. I'm going to run some calculations to see whether taking my small benefit early is worth the permanent reduction to my eventual spousal benefit. Since we have some savings, I might be able to wait until my FRA. I'll definitely try to speak with SSA directly to get exact numbers for my situation before making a final decision.

One thing I haven't seen mentioned yet - you might want to consider whether you qualify for any other benefits while waiting. If your income is low enough, you could potentially qualify for programs like SNAP, Medicaid, or utility assistance during those years between 62 and your FRA. Sometimes these benefits can help bridge the gap financially, making it more feasible to wait for the higher Social Security payments. Also, don't forget that if you do take your benefit early at 62, you'll be subject to the earnings test if you're still working. In 2024, you can only earn up to $22,320 without having benefits reduced. Just another factor to consider in your planning! Good luck with your decision - it sounds like you're being very thoughtful about weighing all the options.

I'm currently going through this exact same process - retiring at 65 before FRA while trying to navigate the earnings test! Reading through all these responses has been incredibly helpful. One thing I learned from my financial advisor that might be useful: if you're planning to have any consulting income or part-time work after you "retire," make sure to factor that into your earnings projections too. I almost forgot to include some freelance work I was planning to do, which would have put me over the limit unexpectedly. Also, regarding the gap month issue - something that worked for me was timing my final paycheck and any PTO payout strategically. My HR department was flexible about when they processed my final vacation payout, which helped me stay under the monthly limit for my first benefit month. The SSA-131 form mentioned earlier is definitely important - I had to revise mine twice because my initial earnings estimate was way off. Better to overestimate than underestimate if you're unsure! Good luck with your retirement planning - it sounds like you're being very thorough in thinking through all the details.

Just wanted to add another perspective as someone who recently went through this process with my spouse. We faced a similar situation where we both were retiring before FRA with different earnings scenarios. One thing that really helped us was creating a simple spreadsheet to track different scenarios - starting benefits in different months and calculating the projected withholding amounts. This made it much easier to visualize the financial impact of each option. Also, regarding the application timing - we submitted our applications exactly 3 months early as recommended, but I'd suggest following up about 6 weeks before your desired start date to make sure everything is processing correctly. We had a small hiccup with some paperwork that could have delayed things if we hadn't checked in. For the vacation payout timing issue - definitely worth asking HR about flexibility. Many companies can be accommodating about when they process final payments, especially if you explain it's for Social Security coordination purposes. Even shifting it by a few days into the next month could make a difference in your calculations. The recalculation explanation after FRA is spot-on and really important to understand. It helped us feel much more comfortable about starting benefits even knowing some would be withheld initially.

Thanks everyone for the helpful responses! I'm going to create my my Social Security account today to check my projected benefit amounts and the family maximum. Then I'll try to speak with an SSA representative to get exact figures before making my decision. The mix of health issues, raising two kids, and long-term financial planning makes this complicated, but your advice has been invaluable in understanding how this works!

Just wanted to add something important that hasn't been mentioned yet - as a widower with dependent children, you might also want to look into survivor benefits for your kids based on your late wife's work record. If she was eligible for Social Security, your children could potentially receive survivor benefits that might be higher than the dependent benefits they'd get from your record. You can't receive both types of benefits simultaneously, but you can choose whichever is higher. This could significantly impact your decision about when to file for your own retirement benefits. The SSA can help you compare both options when you speak with them.

anyone know if IRA distributions count towards the earnings limit? i might retire next year too and was gonna use some of my IRA money

Just wanted to add one more important detail that I learned the hard way - when you do apply for Social Security, make sure to clearly indicate on your application that you're retiring mid-year and will only be earning self-employment income after your benefit start date. There's a specific section where you can explain your work situation. I'd also recommend keeping detailed records of your last day of W-2 employment and when you officially "retire" from that job, because SSA may ask for documentation. The clearer you are upfront about your earnings timeline, the less likely you'll have issues later. Also consider doing a trial work period calculation with SSA before you start benefits - they can walk you through exactly how the monthly earnings test will apply to your specific situation.