Financial Planning When You’re Over 50 With Student Loan Debt


Securing your retirement with student loans still looming over your head and over 50 years old will be rough but not impossible to tackle. Say you have Parent Plus loans; your best option is to consolidate them and keep them separate from other federal loans. By consolidating your Parent Plus loans, you become eligible for income-based repayment plans that can range from 10-20% of your income.

It is imperative that you continue/start to max out your retirement accounts because by doing so reduces your student loan monthly payment. Being over 50 allows you to contribute an additional $6,000 on top of the $19,000 limit for those not over 50. Under ICR, student loan payment is calculated as follows; AGI (Adjusted Gross Income) – 100% of the poverty line times 20%. For example, Martha and her husband Jim combined make $250K and owe $200K in student loans. 

If they decide not to max out retirement accounts, according to ICR their payment would be 20%* (250,000 -16,910)/12 = $3884.83

However, by maxing out their retirement accounts, according to ICR their payment would be 20%*(250,000-50,000-16,910)/12 = $3051.50

Again, if you are over 50, retirement savings take priority over paying off student loans. If you owe less than $50,000, it is best to refinance your loans preferably through a credit union. Another great strategy is to wait until you are 70-72 years old to claim for social security because your benefit will increase by 32%. 

If you are making under $50,000 a year, consider supplementing your income by taking on a second job that fits your passion/interests. For example, if you love driving you can be a Lyft driver,  if you love dogs/cats you can be a low-maintenance part-time pet caretaker on the weekends, or you can be a personal concierge by helping elderly neighbors by buying groceries, picking up dry-cleaning and gardening. 

Read my “The Emergency Fund” post , as a guide for planning for retirement but with a longer time-frame to suit retirement years. Make sure to include a buffer expense for unexpected medical bills and home repairs; in short, you should have at least 2-5 years of living expenses saved. After saving 2-5 years of living expenses and maxing out retirement accounts you can tackle student loans faster by making larger payments. 

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