An almost retiree wants to maximize his social security. Here is some advice.
An almost retiree wants to maximize his social security.  Here is some advice.

An almost retiree wants to maximize his social security. Here is some advice.

Noli Cabantug has spent his career going back and forth between the public and private sectors. Now, at age 58, he wonders what his retirement income will look like and what he can do over the next few years to improve it.

Mr. Cabantug, a licensed practical nurse living in Pomona, California, teaches public high school students about medical careers. With 18 years invested, he expects to receive about $ 1,300 a month from a state teacher’s retirement program if he retires at age 62 and $ 1,800 a month if he retires at age 67.

He has also paid for social security for decades, where he worked as a nurse in the private sector during school breaks and before becoming a full-time educator. Now he is considering whether he should work longer as a teacher to increase his pension or return to nursing when he turns 62, depending on how it affects his social security.

Mr. Cabantug says he earns the equivalent of $ 42 an hour for tuition, compared to up to $ 60 an hour as a nurse, a job that also allows for overtime.

Together, Mr Cabantug and his wife, Marie Cheryl Cabantug, earn about $ 110,000 a year, and their 25-year-old son Brian lives with them to save money. Mrs Cabantug, 48, is a trained nurse at a home health agency and plans to continue working for the foreseeable future. The couple pays about $ 400 a month for private health insurance for her because she prefers to use Kaiser Permanente over the health insurance that her husband’s work provides.

The couple has about $ 160,000 in IRAs and $ 250,000 in equity in their home. They have about 20 years left on their mortgage, which has an interest rate of 4.25%. Monthly housing costs are added to $ 2,600 with an additional $ 880 to utilities. The family rarely eats out, and they give tithes about 10% of their income to support churches in the Philippines.

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They earn about $ 800 a month to rent a room in their home, and they expect to earn an additional $ 1,000 a month from another rental unit on their property from next year. They own a paid vacation home in the Philippines worth about $ 40,000, which they rent out most of the time.

Mr. Cabantug says he is interested in learning more about long-term care insurance.

Mr. Cabantug says he enjoys working in both areas. “Teaching is shaping the character of the young and the promising, as well as young adults who need inspiration,” he says. “Nursing is care through touch.” But if his retirement income is secure, he says he might prefer the flexibility, variety and higher pay for nursing in his remaining years of work.

Advice from a professional

Mr. Cabantug is eligible for Social Security because he has worked in the private sector for at least 40 eligible quarters, says William Huston, founder and chief investment officer of Bay Street Capital Holdings in Los Altos, California. But he will not receive his full dividend.

Workers like Mr. Cabantug is (with rare exceptions) subject to the Windfall Elimination Commission, which reduces social security benefits for retired workers, who also receive pension benefits based on incomes that were not subject to social security tax.

Assuming Mr. Cabantug starts collecting at age 67, his benefit will be reduced to about $ 680 a month from the $ 1,372 he would receive if he did not also retire.

Sir. Huston says that Mr. Cabantug should consult with his retirement plan to get more clarity on how it would change if he continues to teach. He says that while he appreciates Mr Cabantug’s focus on trying to maximize his retirement income, simply earning a higher income as a nurse over the next few years is something he should not overlook.

Sir. Cabantug is eligible for fundraising contributions for its retirement savings, and the pair should maximize tax-favored and tax-free accounts such as traditional and Roth IRAs and Mr. Cabantug’s Workplace 403 (b), says Mr. Huston.

The couple does not spend much on luxury, but Mr. Huston suggests they buy a cheaper car insurance policy and examine their supply budget to look for more savings.

Long-term care insurance is expensive, says Mr. Huston, but seven out of 10 Americans are expected to need care as they get older. He suggests that the couple investigate a policy with a repayment rider that gives the heirs money back if the policyholder dies without taking advantage of the benefits. It costs more, he says, but it gives peace of mind.

Ms. Gallegos is the Wall Street Journal editor in New York. Mail her on [email protected].

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