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What is the Value of Education in Today’s Job Market?

Parents today may take on a significant financial obligation when putting their children through school. Many of these young adults also take on big liabilities in the form of student loans either in conjunction with their parent’s help paying for school or when paying for school on their own.

As you might expect, higher levels of education have corresponded with higher wages. For example, the average annual earnings for full-time workers age 25 and older with an Advanced Degree was $87,194, individuals with a Bachelor’s Degree averaged $56,665, and High School Graduates averaged $30,627 per the Census Bureau statistics from 2009. Over a hypothetical 40 year time period, the net present value of the three different education levels is striking. A high school graduate will earn a present value of $1.2MM over his or her 40 year working life. A college graduate paying $50K in annual tuition payments for four years and then working for 36 years will earn a present value of $1.8MM* over his or her career. Finally, someone earning an advance degree after six years of school at the same $50K/year tuition rate will earn a present value of $2.7MM* over his or her remaining 34 year career. All the above calculations assume inflation of 3%/year and a present value discount rate of 3%.

But wait, this implies that someone has a job to begin with! Fortunately for college graduates, their unemployment rate is only 3.9%– well below the national average of 8.2%.* High School graduates with no college experience and High School graduates with some college experience register unemployment rates of 8.1% and 7.9%, respectively, right near the national average. Individuals without a high school degree are much less likely to get a job in today’s competitive job market as their unemployment rate is 13.0%.*

The key is not to go to college but to have a plan to finish college. And a couple extra years in school earning an advanced degree tends to really pay off over time.

*Source: J.P. Morgan Asset Management, 5/31/12

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Please remember to contact RegentAtlantic if there are any changes in your personal or financial situation or investment objectives for the purpose of reviewing our previous recommendations and services, or if you wish to impose, add, or modify any reasonable restrictions to our investment management services. A copy of our current written disclosure statement discussing our advisory services and fees is available for your review upon request. This presentation is not a substitute for personalized advice from RegentAtlantic. This article is current only as of the date on which it was sent. The statements and opinions expressed are, however, subject to change without notice based on market and other conditions and may differ from opinions expressed in other businesses and activities of RegentAtlantic. Descriptions of RegentAtlantic’s process and strategies are based on general practice and we may make exceptions in specific cases.

Important disclosure information

Please remember that different types of investments involve varying degrees of risk, including the loss of money invested. Past performance may not be indicative of future results. Therefore, it should not be assumed that future performance of any specific investment or investment strategy, including the investments or investment strategies recommended or undertaken by RegentAtlantic Capital, LLC (“RegentAtlantic”) will be profitable.

Please remember to contact RegentAtlantic if there are any changes in your personal or financial situation or investment objectives for the purpose of reviewing our previous recommendations and services, or if you wish to impose, add, or modify any reasonable restrictions to our investment management services. A copy of our current written disclosure statement discussing our advisory services and fees is available for your review upon request.

This article is not a substitute for personalized advice from RegentAtlantic. This article is current only as of the date on which it was sent. The statements and opinions expressed are, however, subject to change without notice based on market and other conditions and may differ from opinions expressed in other businesses and activities of RegentAtlantic. Descriptions of RegentAtlantic’s process and strategies are based on general practice and we may make exceptions in specific cases.

RegentAtlantic does not provide legal or tax advice. Please consult with a legal and or tax professional of your choosing prior to implementing any of the strategies discussed in this article.

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