# Jesse works for an engineering firm earning \$54,000 per year. Jesse is 53 years old and plans on retiring at age 65

Jesse works for an engineering firm earning \$54,000 per year. Jesse is 53 years old and plans on retiring at age 65. He’s considering working part-time so that he can work on another degree. His new degree would take him 3 years to earn and cost a total of \$30,000. After getting the degree, Jesse will make \$75,000 per year.

Do you think that the new degree is worth the investment? Explain your reasoning.

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1. To determine whether Jesse’s new degree is worth the investment, we need to analyze the financial impact of his decision, including the cost of the degree, the change in his income, and the time remaining until his retirement.

### Current Situation

• Current Salary: \$54,000 per year
• Years until retirement: 65 – 53 = 12 years

### New Degree Scenario

• Duration to earn degree: 3 years
• Cost of degree: \$30,000
• New Salary after degree: \$75,000 per year
• Years working at new salary before retirement: 65 – 53 – 3 = 9 years

### Financial Analysis

1. Income during the degree program (assuming he works part-time)
• For simplicity, let’s assume he earns half his current salary while studying.
• Part-time salary: \$54,000 / 2 = \$27,000 per year
• Total income over 3 years while studying: \$27,000 * 3 = \$81,000
2. Total cost of education
• Cost of degree: \$30,000
3. Income after completing the degree
• New salary: \$75,000 per year
• Total income over 9 years after getting the degree: \$75,000 * 9 = \$675,000
4. Total income comparison over 12 years (current vs. new scenario)
• Current scenario (without new degree):
• Total income over 12 years: \$54,000 * 12 = \$648,000
• New scenario (with new degree):
• Income while studying (3 years): \$27,000 * 3 = \$81,000
• Income after degree (9 years): \$75,000 * 9 = \$675,000
• Total income over 12 years: \$81,000 + \$675,000 = \$756,000
• Minus cost of degree: \$756,000 – \$30,000 = \$726,000

### Conclusion

• Current scenario total income: \$648,000
• New scenario total income (after degree costs): \$726,000

Jesse will earn \$726,000 over 12 years with the new degree compared to \$648,000 if he continues without the degree. Therefore, the difference is:

\$726,000 – \$648,000 = \$78,000

Jesse will be \$78,000 better off financially if he pursues the new degree.

Conclusion: Yes, the new degree is worth the investment for Jesse. Despite the initial cost and the temporary reduction in income while studying, the increased salary after obtaining the degree results in a significantly higher total income by the time he retires.