Will business sale income affect my Social Security benefits? Considering delaying until FRA

Good news - the proceeds from selling your business are NOT counted as earnings for Social Security's earnings test. The earnings test only applies to wages from employment or net earnings from self-employment. A one-time capital gain from selling your business is not considered earnings for this purpose. What matters is whether you have actual wages or self-employment income for 2025. If you're truly retired with no other income from working, you can claim at 63 without worrying about the earnings limit reducing your benefits. That said, waiting until your FRA would still give you a substantially higher monthly benefit for life - about $850 more per month in your case. Whether to take reduced benefits now or wait depends on your health, financial needs, and life expectancy.

u might want 2 check with an accountant because i think some of the business sale could be ordinary income not capital gains depending on how the deal was structured!! my brother sold his auto shop and some of what he got counted as income somehow

Whether to start SS now or wait until your FRA involves a lot more than just the earnings test. Let me break this down: 1) If you start at 63, you're locking in a permanent ~27% reduction in benefits compared to FRA 2) If you live past around 80, you'll collect more overall by waiting until FRA 3) COLA increases are applied to your base benefit, so starting with a higher amount means bigger dollar increases each year 4) If you're married, your decision affects potential survivor benefits for your spouse With $875K from your business sale, do you actually need SS income right now? If you can afford to wait, the 8% per year increase between now and FRA is basically a guaranteed return you can't match in the market with the same safety.

I sold MY business in 2022 and took SS right after. WORST MISTAKE EVER!!! Nobody told me about the TAXES on Social Security when combined with other income!!! If your "combined income" (AGI + nontaxable interest + 1/2 of SS benefits) exceeds $25,000 (single) or $32,000 (married), up to 85% of your benefits become TAXABLE!!! With investment income from your $875K, you'll definitely hit those thresholds, and you'll lose a big chunk to taxes. I'm PAYING THROUGH THE NOSE now and it's TOO LATE to change my decision!!!

Congrats on selling your business! I was in a similar boat last year. The business sale itself won't count for the earnings test, but have you considered the health insurance aspect? If you're not 65 yet, you'll need insurance before Medicare kicks in. That was my biggest expense after retiring at 62.

Just want to chime in - I tried calling Social Security directly about a similar question (mine was about rental income, not a business sale) and spent DAYS trying to get through. Kept getting disconnected or waiting for hours. I finally used a service called Claimyr (claimyr.com) that got me connected to an actual SSA agent in about 15 minutes. They have a video showing how it works: https://youtu.be/Z-BRbJw3puU The agent confirmed that only wages and self-employment earnings count for the earnings test, not passive income or one-time sales. Definitely worth getting this confirmed directly from SSA for your specific situation.

My sister took SS at 62 and my brother waited till 70. Sister regrets it now at 85 cuz her checks are so much smaller than his even though they had similar careers. Just another perspective to consider.

One more critical point: Since you mentioned your wife was a teacher, she may be affected by the Windfall Elimination Provision (WEP) or Government Pension Offset (GPO) if she receives a pension from employment not covered by Social Security. This could potentially reduce her own benefit or any spousal benefits. This is a complicated area of Social Security that many financial advisors miss.

one more thing i forgot to mention, didnt u pay yourself a salary from your business? that last salary from 2024 will count for 2024 earnings test if you already filed for benefits in 2024

Based on everything in this discussion, here's a summary that might help you decide: 1. The business sale proceeds won't count toward the earnings test 2. With your assets, you don't immediately need the income 3. Waiting until FRA gives you about $850 more per month for life 4. Your wife's teacher pension may complicate your overall strategy due to WEP/GPO 5. Either way, you'll need to plan for taxes on your SS benefits due to your investment income If I were in your position with substantial assets and no immediate need for cash flow, I'd seriously consider waiting until FRA for the higher benefit, especially considering potential longevity and survivor benefits.