Ask Money

Debt, education and early retirement

Chris Farrell Dec 22, 2010

Question: As someone with about 48,000 in an undergrad loan for Bus Admin in Accounting who wants to retire early, would it make sense to take on the debt of an MBA program? I have no children, and I don’t plan on having any. I’m wondering if a CPA license would make more sense than taking on the added debt. Oh, I’m 35. Essentially my question is does more education on top of an already practical education make sense if there’s a shorter than usual time horizon to pay back the loan. Thomas, Crum Lynne, PA

Answer: The quick answer is, Probably not.

But my question to you concerning the MBA is, “To do what?” You already have a large debt. Before I would owe any more money I would want to know what is it that the MBA will allow you to do that you can’t do now. In other words, what is the psychological and financial return on the extra investment that justifies going deeper into debt?

Whether you plan on retiring early or not, I would still focus on what it is you want to do with your job and career. What is the path? Where is the satisfaction?

For instance, the Graduate Management Admissions Council came out with its latest report on the state of the job market for MBAs.The market is getting better than last year, but it still isn’t going gangbusters. Similarly, I would research job and income prospects for CPAs.

That said, if you are really serious about wanting to retire early you’ll need to be very aggressive with your savings. Key to an early retirement is either making an unusul amount of money during a shortened career or to build up a large pool of savings, have no debt, and live frugally. I would add that even if you retire you’ll probably want to work part-time to bring in additional income and reduce the draw on your savings. . .

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.