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Ask Jean: Student Loans, Social Security, Retirement

Hi Jean, I’ve watched your financial advice chats and read them in news/magazines for years and really appreciate your views! Couple questions:

1.  “Federal vs. Private” – I’m confused because no advisor ever cites examples…I have consolidated the Parent Plus loans I took out to fund the expected family contribution for my son’s college education with the U.S. Department of Education – is that “federal” or “private?”  The interest rate is 7.9% so it’s not as low as my son’s consolidated with the Department of Education of his subsidized/unsubsidized loans (which is more like 4%).

2.  I’m gainfully employed as is my wife, about $150k annual adjusted gross income. I’m paying the parent PLUS consolidated loan back at graduated level, $593/month for 2 years, then $640/month, then $700, etc.; graduating as my income increases (I hope).  I don’t carry any credit card debt, my car loan is paid by my company, and my mortgage is $825/month for 15 years at 4.5% for 12 more years. I have maybe 20% equity in the house…credit score over 750…401(k) + pension is 10% of gross with match of
up to first 6%… Am I managing my money correctly or is there something I can do to improve my cash flow/debt burden?

3.  I am 49, my wife is 60.  She has no savings (relying on me). I have 200K in 401(k)/pension…no other investments besides home…maybe 3 months worth of emergency savings. She works as an independent contractor in gas industry and while the money is very good, it can be sporadic. She
thinks she wants to retire at 62 and take Social Security…but I don’t see how she can do that because I have to work at least another 12 years and since we file jointly, her Social Security will be eaten up by taxes, right? Any suggestions?

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