Paths to Wealth, Socioeconomic Mobility in America

Path 1: Invest in Education

Back of Envelope Investment Profile of Education, using data from links above.  Retirement age is 67 for those born after 1960.

Education Amount to Invest Calculation Lifetime Earnings Calculation
High School Dropout 74k-146k [Raise an 14-18 year old] + school costs $1,225,000 to $1,325,000 (67-18 or 67-14 = 53 or 49)*25k
High School Degree 94k-241k [Raise an 18 year old] + school costs $1,666,000 (67-18 = 49)*34k
Some College 150k-320k [Raise an 18 year old] + school costs + some college tuition + some college living expenses $1,786,000 to $1,824,000 (67-19 or 67-20 = 48 or 47)*38k
Associates Degree 180k-380k [Raise an 18 year old] + school costs + 2 years college tuition, expenses, living expenses $1,927,000 (67-20 = 47)*41k
Bachelor’s Degree 240k-490k [Raise an 18 year old] + school costs + 4 years college tuition, expenses, living expenses $2,497,500 (67-22 = 45)*55.5k
Master’s Degree 300k-600k [Raise an 18 year old] + school costs + 4 years college tuition, expenses, living expenses + 2 years master’s tuition, expenses, living expenses $2,924,000 (67-24 = 43)*68k
Professional Degree 300k-720k [Raise an 18 year old] + school costs + 4 years college tuition, expenses, living expenses + 1 to 3 years professional school tuition, expenses, living expenses $3,780,000 to $3,960,000 (67-23 or 67-25 = 44 or 42)*90k
Doctorate Degree 350k-700k [Raise an 18 year old] + school costs + 4 years college tuition, expenses, living expenses + 4 to 8 years doctorate school tuition, expenses, living expenses. $3,295,500 to $3,464,500 (67-26 or 67-28)*84.5k

*For the calculations above, I used the lower end (94k) of estimates of raising an 18 year old for people who dropped out of high school, and I slowly raised that estimate to 180k for people who pursued post-graduate degrees, since I believe the chances that someone pursues a higher degree is tied to their initial socioeconomic status: if the parents could invest a lot in them early on, they will probably get a more advanced degree than if the parents did not.  (To be done later: Can anyone recommend good software to make this into a info-graphic/chart/diagram? I will add probability distributions to each path’s potential earnings, as right now it’s based on averages, and I will further break down costs based on income brackets, and show it’s affect on the success probability distribution)

Path 2: Invest in Investments

  • Live below your means, and invest your accrued savings in assets you can afford.
  • Unavailable option to those who barely survive

Invest in Career Earning Potential

  • Work hard to get recognized and handed more responsibilities.  Leverage position and skills for a promotion at the same company or a different one. Networking critical.
  • Unavailable option for many careers–must avoid dead-end jobs.

Path 3: Invest in Creative Hobbies

  • Put in your 10,000 hours to develop a unique skill, apply Networking and hope someone, possibly yourself, finds a monetization strategy for it.
  • High likelihood of no payoff.

Paths to Poverty: Invest in Consumer Hobbies

  • Consume content, entertainment, products.  Invest in little to nothing.

Capitalism awards investors, and punishes consumers.  On the surface, capitalism promotes consumerism as a means to achieving happiness, behind the scenes, capitalism consists of delayed gratification and intelligent investing to maximize lifetime consumption as measured by monetary value.

This post is part of AttemptedLiving’s Life Education Curriculum, a collection of core knowledge everyone should have.  Look under “Understanding Life in America”

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