Taking Social Security, Paying Student Debt: Financial Planners Weigh In

People often think of planning for retirement as a combination of saving and picking an ideal mix of investments, all to arrive at just the right size nest egg. But it is also about juggling trade-offs and avoiding costly mistakes, all while paying for immediate needs. It’s a difficult calculus.

Layer in market turbulence, rising inflation and interest rates and a mixed job outlook, and it’s no wonder many Americans feel the stakes are higher than they were a few years ago.

The New York Times asked readers to share their most pressing retirement finance questions. We sought planners’ advice on three of them.

Paying off student debt in your late 60s

Scot Sandage of Tell City, Ind., asked: At age 67, having $80,000 of student loan debt is worrisome. What are my options?

Mr. Sandage started collecting Social Security benefits last year, but he works part time and doesn’t know how he will ever truly retire, given his student loan balance.

Now he works remotely as a psychiatric nurse practitioner, a second career he chose in his 50s after working in aluminum sales. But financing his education with student loans has come at a high cost. He acknowledged that he didn’t know how he would pay them back. Even with his annual salary, a side job evaluating graduate nursing students and Social Security income of $2,500 a month, making the payments — estimated at $1,000 a month — feels impossible.

Ever since finishing school, Mr. Sandage said, “I’ve deferred payments because it’s the cheapest option,” even though he’s known that, except during the federal pandemic payments pause, interest has been accruing. He said he felt trapped by the debt.

“It is worrisome to know what to do,” he said. “Life is expensive, especially with inflation increasing.” He thinks often about reducing his work hours to try to enjoy his life, especially because he will soon become a grandfather. “We simply do not know how long we might live.”

Turner J. Amacher of WealthFD, based in Philadelphia, offered a range of advice. The first step that Mr. Amacher advises clients in Mr. Sandage’s position is basic: Identify whether the loans are private, federal or a combination of the two — which people often don’t know because the numerous loan servicers can make it confusing. Many students complete school without having a full understanding of their loans and their terms, he said.

“Student loans are a big problem, and trying to educate yourself as much as possible is really one of your best options,” Mr. Amacher said.

For federally backed student loans, he recommends calculating the numbers to find the most affordable option between two of the most common: Income-Based Repayment, or I.B.R., and Revised Pay as You Earn Repayment, known as REPAYE. Borrowers can submit supporting documentation to calculate a new payment that could be lower than what would be due under the standard, 10-year repayment plan. This might affect the balance of the outstanding loan — because interest keeps accruing, many borrowers on income-linked plans find their balances rising even as they make their payments — but the monthly payments could become more manageable. After a certain length of time, typically 20 years, the government forgives any remaining balance.

“Look at both and run the numbers,” Mr. Amacher said.

For those who work in the public sector — including with federal and state governments, public schools and nonprofits — programs like Public Service Loan Forgiveness can help.

Mr. Amacher said he would point borrowers like Mr. Sandage, who are looking for affordable advice and are starting to get a handle on repayments, to Studentaid.gov for an overview of what to expect from their payment option.

Options with private loans are more limited than with federal ones, Mr. Amacher said, and include reconsolidating or trying to reduce a loan’s interest rates. He said he referred some borrowers to a student loan consolidator, which can help people figure out what’s available to them.

He also steers borrowers to a certified student loan professionals’ website for direct help. Even those with larger balances, including the many clients of Mr. Amacher who are dentists, and who typically graduate with about $350,000 in debt, can find ways to wrangle that debt into a more manageable sum, he said.

“The best way to think about these big numbers is to take a step back and take a breath and realize there are ways to make payments affordable,” Mr. Amacher said.

Should my race figure into my Social Security decision?

Adrienne Ingrum of New York City asked: Life expectancy for Black people is lower than for white people. I wonder whether that advice, to wait to take Social Security, is wise for Black people?

Ms. Ingrum, 69, started taking Social Security when she was 66, which, based on her birth year, is her full retirement age for that benefit. But she has long wondered when the best time to begin collecting it actually is. A book editor who has lived in Harlem since 1980, Ms. Ingrum said this question had been on her mind after she saw the experience of a close friend, who was Black: He worked until 70, anticipating the 8 percent bump in benefits he would receive from Social Security for having done so, but he wound up struggling with work in his last few years on the job.

“Those last couple of years while he was waiting to collect the Social Security were hard for him,” Ms. Ingrum said, but, she added, he’d believed the extra payments would allow him to cover all of his basic expenses. “It might have been better if he had started collecting it earlier and then had worked in a more limited way to fill in the gaps.”

Soon after he retired, and finally collected his desired higher Social Security benefits, he died — something that still troubles Ms. Ingrum, who is also Black. “I’m reminded of a guy I was dating who said, ‘Adrienne, Black men in Harlem don’t live to be real old,’” she said, “and it really hit me.”

Ms. Ingrum said bringing in regular income right away from Social Security became more important to her than holding out for a larger payout. To her surprise, she found a new, rewarding job in 2021 as a senior book editor. She doesn’t see herself retiring from it. But despite the income from that job, Social Security gives her confidence.

“It really gave me security so I could choose what I want to do,” Ms. Ingrum said.

Preston Cherry, the founder of Concurrent Financial Planning, in Green Bay, Wis., responded to Ms. Ingrum’s concerns. Dr. Cherry, a certified financial planner, said the question of timing Social Security benefits required a close look at individual circumstances. He rejects the idea that there is one ideal age at which to claim the benefits. (The earliest anyone can claim is 62.)

“There’s a lot more meat on the bones to answer this without race,” said Dr. Cherry, who is Black. “There is a perception of personal preference and longevity.”

Instead of asking whether someone who is Black should wait to collect Social Security, Dr. Cherry encourages reframing the question to look at each person’s heredity and likely longevity, available financial resources and appetite for investment risk — and to consider how Social Security income would change one’s lifestyle.

“You don’t want to discount too much into the future and discount how am I living now,” he said. “What personal considerations should you take — cultural is one of them, social, economic, leaving money on the table versus not.”

Dr. Cherry also encourages his clients to consider what their quality of life would be like if they waited to collect benefits. An individual’s preferences could tilt one person toward holding off, in order to secure a higher monthly payment, and another to take them sooner, as Ms. Ingrum chose to.

“We shouldn’t be shaming the taking of Social Security,” he said. “It’s on time if it fits our factors, and we shouldn’t be shaming if you take it early and it fits your personal factors.”

Retirement savings vs. college costs

Wendy Keyser of Ashfield, Mass., asked: The question that keeps me up at night is how to handle paying for my two kids’ college costs balanced with putting more into retirement savings. I would like to keep funding my 403(b) plan, but I think I may have to hold off on that for four years while my kids are in college.

Wendy Keyser, 52, and her wife, Lesley, 59, both educators who live in Ashfield, Mass., realize they are fortunate to have pensions to help support their retirement. But now that their twins are freshmen in college, they are feeling the pinch.

Even with a pension, Ms. Keyser said, she does not expect her retirement income to cover their expenses. So, in 2021, the couple started contributing to a 403(b) plan, a defined contribution retirement plan offered to employees of public schools and some nonprofits. But with the children in college, and some unexpected bills arising, she wonders if it is better for their children to take a small student loan to cover those bills so she can continue contributing to the 403(b).

“The bill that’s in front of you feels a lot more real than the bill that’s hovering in the future, so, honestly, how will I pay these college bills?” Ms. Keyser asked.

There’s more: She and her wife both have elderly parents and a new perspective on how long they need to be able to support themselves as they age. And they are aware that they may need more savings in their retirement than they now estimate, along with some type of long-term care insurance or plan.

“It’s so hard to make sure you’re figuring out where all the little pots of money are coming from,” Ms. Keyser said.

Ross Levin, the founder of Accredited Investors in Edina, Minn., considered Ms. Keyser’s question. The Keyser family is right on track with their current plan, one they have created mostly on their own, Mr. Levin said, especially given the pressures parents of college students face juggling their needs with their kids’.

“I want to stress how anxiety-provoking it is to try to balance trying to put your kids through college and saving for retirement,” Mr. Levin said. “It’s not good planning to jeopardize your own financial security.”

As Ms. Keyser has noticed with her parents’ and in-laws’ needs, Mr. Levin has also seen that many people underestimate the assets they will need should they become infirm.

“We notice with our clients that one of the most financially stressful things is caring for your aging parents,” Mr. Levin said, adding that he encourages clients to put their retirement first, because their own financial stability as they age is a gift to their children.

“You can borrow for education, but you can’t borrow for retirement,” he said.

So, Mr. Levin says, if the couple can continue to fund the 403(b), they should, and they should feel good about that choice. He said he would steer them toward their children’s taking out a student loan, since that would preserve the couple’s financial flexibility. They could always help repay the loans, if they chose to.

“They are being unnecessarily hard on themselves,” Mr. Levin said, since the pensions help achieve a steady income stream, which is one of the more difficult aspects of retirement. “They’ve been really thoughtful — they have pensions, they have 529 plans, they have personal investments. They are doing everything right. My advice would be to actually celebrate the choices they’ve made.”