How Much Do You Need To Retire? One Big Bonus

There are really no magic formulas to a prosperous retirement.

Save as much as you can. Stay out of debt. Invest well or be lucky enough to have a guaranteed pension.

But what if you would like to retire later—and choose to work more?

That's a luxury for many that assumes that your health is decent and you don't need to take Social Security before age 66.

If there is one major factor that favors later retirees. It's education.

The more you have, the more flexibility you will enjoy to work more and prosper.

That's the conclusion of a recent study by Matthew Rutledge of the Center for Retirement Research at Boston College, which confirms the findings of earlier research.

Education as a work-longevity bonus has been known for some time. But in recent years, the gap between high school and college-educated workers has widened.

From 1976-79, for example, the average retirement age was 64 years for high school grads and almost 65 years for college graduates.

By 2010 (through 2016), college grads retired around 66, while those with a high school diploma were retiring earlier than they did nearly four decades earlier—at age 63.

While the three-year gap between the groups doesn't sound like much, in terms of a demographic divide, it's huge. Those working longer tend to save more, mostly because they are typically earning more.

Along with gains in longevity and overall medical care, the more educated usually enjoy a longer period of prosperity in retirement. While this paints a rosy picture for those with more education, it doesn't highlight some of the underlying woes of the labor market.

College graduates tend to earn more than high school grads, have better healthcare, more disposable income and are less likely to leave the workforce due to illness or injury. One of the reasons people retire early is because they are disabled, suffering from chronic illness or choose to take Social Security at 62 because of loss of income.

Still, education looms large in the longevity divide. Education that improves your employability and income typically raises lifetime income.

Not getting into debt for degrees that don't translate into a higher salary is also a plus.

"Working longer," writes Rutledge, "is perhaps the most effective way for Americans to improve their retirement security, and the life expectancy gains that have lengthened the duration of retirement have made working longer even more necessary."

The bottom line: Focus on education that makes you intellectually nimble. In an age of massive automation, how you use your mind—and not your body—has never been more important.


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