More Education Means Better Retirement

The more education you have the better off you’re likely to be during retirement, according to a new study from the National Center for Policy Analysis (NCPA). 

“For those over age 65 who wish to continue working, each year of education beyond high school is associated with a 1 percent increase in the likelihood that they will be employed, controlling for age,” said NCPA Senior Fellow Pamela Villarreal.  “A senior with an associate’s degree is 5 percent more likely to work than a senior with only an 8th grade education, and a college graduate is 4.3 percent more likely to be working than a senior with a high school diploma.”

  • College graduates on average receive $8,482 in annual retirement income other than Social Security — $6,500 more per year than high school graduates.
  • More educated elderly are less likely to experience disabilities during their retirement year.  A college graduate is 6.2 percent less likely to have difficulties with independent living than a high school graduate, and 21.8 percent less likely than someone with only an 8th grade education.

Noting that education matters in ways beyond what many people realize, author Lewis Warne, a research associate with the National Center for Policy Analysis, detailed ways in which 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,” said Warne. “This is good news for the 21 million students across the country attending college.”

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.

Source: Lewis Warne, “More Education, Better Retirement,” National Center for Policy Analysis, July 2013.

The National Center for Policy Analysis (NCPA) is a nonprofit, nonpartisan public policy research organization, established in 1983.We bring together the best and brightest minds to tackle the country’s most difficult public policy problems — in health care, taxes, retirement, education, energy and the environment. Visit our website today for more information.