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Why College Degrees Pay Off Big After 65 (January 9, 2014)

By Matthew Heimer

Having a college degree, along with the higher income that such a credential commands, generally increases your odds of retiring on time. Now, a new study shows that your degree is likely to keep giving you a financial edge even if you need, or choose, to keep working in your 60s and beyond.

For a recent analysis by the Institute for Women’s Policy Research, economist Heidi Hartmann and sociologist Jeff Hayes analyzed Census Bureau data from the years 2005 to 2009, covering people ages 50 and up who were still employed. People with a bachelor’s degree or postgraduate education made up about one third of the pool of people studied.

At ages 50 to 55, the average man with a bachelor’s degree earned about $28 an hour, roughly 42% more than the average man with a high-school diploma or less. Women with bachelor’s degrees earned about $21 an hour, 37% more than their high-school-educated peers. At retirement age, degree-holders saw their income drop faster than those with just a diploma, but the wage gap remained: At age 70, men with bachelor’s degrees were making 31% more than their high-school educated peers; women with degrees earned 21% more.

More important: Degree-holders’ jobs tend to be less physically demanding, and as a result, as study author Heidi Hartmann noted in an interview this week with NPR’s Ina Jaffe, those folks “have the likelihood of working, two, three, four times more at older ages.” More hours worked plus higher wages adds up to a big edge in total earnings: Hartmann and her co-author Jeff Hayes estimated that the average two-bachelor-degree couple would bring in a total of $202,000 in earnings from work after age 65, compared to about $79,000 for a working couple that only finished high school.

Currently, men of retirement age are much more likely than women the same age to hold relatively high-paying knowledge jobs, but Hartmann told Jaffe that she expects that disparity to shrink steadily as women continue to establish themselves in age-proof professions like law, medicine and politics.

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