Going back to school can give you a sense of accomplishment and open the door to new opportunities, but is going back to school for a new or advanced degree worth the investment? We all know pursuing a degree can have a strong impact on finances, career and family.
Here are our 5 questions to ask yourself before going back to school:
Why do I want to go back to school?
Exploring why you want to go back to school is an important and necessary first step. Are you interested in learning something new? Are you looking to move to a new career? Maybe you are hoping an advanced degree will give you a significant income boost. Whatever your reasons for thinking about going back to school, take some time to write them down. Discuss your list with trusted mentors and family members to get their honest input. Their advice could help you find other avenues to reach the same result without the cost and time required by pursuing a degree, or determine that a degree is your best option.
Do I have what I need?
The decision to go back to school is rarely clear cut and you often need more than shiny new school supplies. For example, do you have the required prerequisites for the program you are interested in? Do you have the time to commit to an internship? Thoroughly research the programs you are interested in and schedule an appointment with advisors to discuss the requirements. Be sure to consider the intangibles such as family support, time and personal commitment in your decision as well.
How will I pay for it?
Most degree programs are not known to be affordable. Before choosing to go back to school, talk with your CFP® about how you will pay for it. “Don’t borrow more than you can pay in 10 years, or by the time you retire, whichever comes first. Student loan payments should be 10 percent or less of your gross income — a stretch is 15 percent.” (source) This is especially important to consider if you intend to change careers and anticipate a decrease in pay. It’s also worth looking at community colleges, many of which have programs for students over 50.
How close am I to retirement?
You’ve been saving for retirement and maybe it is just now coming into sight. Will going back to school push it back? If retirement is just a few years away, spending money to go back to school may push it back a few years or decrease your retirement income. Additionally, with retirement in your sights, you may have less time to see a return on your investment. Keep in mind, when you go back to school with 20 years until retirement, you may have 20 years of salary increases to justify the cost. Talk to your CFP® to gain understanding on the impact going back to school may have on your retirement.
Does the cost outweigh the benefits?
As you process the decision to go back to school, create a cost benefit analysis or a list of pros and cons. Add to your list each time you have a conversation and / or do research. When it comes time to make a final decision you will have all of your thoughts in one place. Consider talking over your complete analysis with a trusted advisor before pulling the trigger.
Looking for a financial planner to help you with your goals? Schedule a consultation with one of our Certified Financial PlannersTM today to discuss the impact of going to back to school as well as your financial goals.
