More Education, Better Retirement
July 30, 2013
While some recent studies have identified a decrease in the return to education as the labor market changes, education has a proven impact on lifetime income, says Lewis Warne, a research associate with the National Center for Policy Analysis.
- The Bureau of Labor Statistics (BLS) estimates that, in 2012, the median weekly earnings of individuals with bachelor's degrees were about $400 higher than high school graduates.
- Workers with a professional degree earn the most, about $1,100 more than a high school graduate per week.
- The same BLS data shows that the highly educated are more likely to be employed.
Building upon the idea of increased lifetime income, an analysis of Census data shows that education increases the amount of retirement income (other than Social Security) that a person receives. The extra income grows with each additional year of education, according to Census Data from 2000 to 2011.
- College graduates on average receive $8,482 in annual retirement income other than Social Security -- $6,500 more per year than high school graduates.
- Each additional year of education increases expected non-Social Security retirement income more than the previous year.
The Survey of Consumer Finances confirms that those with more education or income have more saved in retirement accounts and more financial assets than their less educated counterparts. Individual retirement income increases the standard of living for the elderly and decreases the reliance on other government programs like Medicaid.
The Social Security Administration estimates there are 37 million retirees in the United States.
- Analysis of Census data shows that 60 percent of today's retired elderly have no retirement income independent of Social Security.
- Analysis shows that each additional year of education reduces the likelihood of having no retirement income other than Social Security by 3 percent.
Education has long-term impacts through retirement. More education increases retirement savings, decreases dependence on government, improves health and increases employment at both a state and individual level. This is good news for the 21 million students across the country who attend college.
Source: Lewis Warne, "More Education, Better Retirement," National Center for Policy Analysis, July 2013.
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