A high return on ‘educational’ investment

Australians are increasingly participating in education according to Smart Australians^[1],the AMP.NATSEM Income and Wealth Report, which explores two key concepts in our society – education and innovation. This is great news, and as the report states the quality of education and the capacity to innovate are critical to a nation’s prosperity. 

The report uncovers key trends in education and its changing place in Australia. More Australians are completing Year 12 and attaining a university education. Over 3.5 million Australians currently hold a bachelor degree or higher. And in 2011, 77% of students completed Year 12 compared with 45% in 1984. The statistics tell a promising story.

Thirst for knowledge

According to the Smart Australians report, postgraduate education makes a big difference to earning potential. During their working lives, Australians with postgraduate degrees can expect to earn almost twice as much as those with a Year 11 or less qualification: $3.2 million versus $1.7 million. That’s a massive difference!

Achievement levels in education are also being increased by people moving to Australia. Results from Calling Australia Home^[2] reveal that around 46% of young migrants (25 to 34-year-olds) are likely to hold a bachelor degree or higher compared with 20% of those born in Australia.

Australians are considered to be efficient learners too. Spending less on education than the OECD^[3]   average, Australia ranks high by international standards, holding ninth place in tertiary attainment for 25 to 34-year-olds.

Some catching up to do

When it comes to earning potential, the outlook for women doesn’t appear to be very positive and that’s unfortunate.The report reveals that younger generations may be finishing school and going on to university more frequently, but women are still earning less than men. A 25-year-old woman with a postgraduate degree can expect to earn just two thirds of her male counterpart’s lifetime earnings – $2.5 million compared to $3.2 million.

This raises concerns about the retirement quality of Australian women, as their super balances will generally be much less than that of their male counterparts. This means Australian women need to make smart choices about ways to increase their super as early in their lives as possible. For example, salary sacrificing is one option for women with employment, while those without may want to consider spouse contribution or government co-contribution.

State business

As a whole, Australia fares well in international terms, but education varies markedly between individual states and territories.

Students in the Australian Capital Territory (ACT) have twice the educational attainment of other states, while a very low proportion of people residing in the Northern Territory ever complete Year 12.

On average, ACT residents are twice as likely to hold a postgraduate qualification. Of those aged 35 to 39 years, 80% have a postgraduate degree, graduate diploma, bachelor degree, advanced diploma or certificate – 71% of Victorians in the same age group hold such a qualification.

A good education costs money, and given the Smart Australians’ findings, it’s an investment that can really pay off down the track.

Are you looking to invest in your education and open up more possibilities? Or maybe you’re concerned about funding your children’s education and ensuring you give them the best chance to earn a good income over their working life. We can help you with a financial plan that balances both your aspirations and circumstances – contact us on 02 9299 9777 today.

[1] Source: NATSEM. (October 2012). AMP.NATSEM Income and Wealth Report: Smart Australians: Education and innovation in Australia.

[2] Source: NATSEM. (November, 2010). AMP.NATSEM Income and Wealth Report: Calling Australia home: The characteristics and contributions of Australian migrants.

[3] The Organisation for Economic Co-operation and Development is an international economic organisation of 34 countries, founded to stimulate economic progress and world trade. It is a forum of countries committed to democracy and the free-market economy, providing a platform to compare policy experiences, seek answers to common problems, identify good practices, and coordinate domestic and international policies of its members.

What you need to know

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