Financial Independence: Is a Ph.D. Worth Pursuing?

When I first graduated college in 2007, I did not have a clue what I would be doing afterwards. Unlike many of my peers, I did not have an internship lined up, or any prospective job offers. In fact, I was just grateful to be finished with school! After enduring the grind for 4 long years, all I wanted to do was: rest, relax, and party. I figured getting a job probably wouldn’t be so difficult, and if things didn’t work out immediately, I would just go to grad school instead.

First Thoughts

As it turns out, I had one interview over the Summer of 2007, and although I tried my best, ultimately I didn’t get the job (to this day I still wonder why not?). I didn’t sweat it, and decided to work on my M.S. degree instead. That Fall, I started studying electrical engineering at a local state university. In the course of my studies, I became somewhat enamored with some of the more esoteric topics. For a time, I seriously contemplated the thought of pursuing graduate studies even further, and applying to a Ph.D. program.

My college roommate was accepted into a Ph.D. program during our senior year of undergrad. He seemed rather enthused at the time, as most of his friends and family were super excited for him. Naturally, I figured that the path down higher education would of course lead to a more lucrative road.

Buyer’s Remorse?

Fast forward 5 years later, and my old roommate is now entering his sixth and final year in the Ph.D. program. During the course of his graduate studies, I have been working full time (although I did complete a M.S. degree in parallel). I can’t speak for certain about his financial situation, but I do know the following based on our conversations:

  • The topics he researches are probably only relevant to a handful of people in the entire world
  • He worries about his chances of being hired after graduation because:
  1. he may be overqualified for the work
  2. companies may not want to “over-pay” him a Ph.D. level salary, but instead low-ball him with an offering more inline with what a bachelor’s or master’s degree would command
  3. he has no relevant industry work experience, but a theoretical pedigree
  • He has been “broke as a joke” these past 5 years. He has minimal savings, no investments, no properties, lots of debt, etc. and feels like friends his age are “leaving me in their dust”

The Alternative Play

For myself, I did debate for awhile whether or not I should pursue the Ph.D. But as fate would have it, I applied for an internship in the Fall of 2007 and received an offer. After working as an intern for about a year and getting my master’s, I was fortunate enough to be promoted to full-time, which forced me to ditch the idea of a Ph.D. As they so often say, the rest is history.

Here are my own results over the last 5 years:

  • Graduated with M.S. degree
  • 5 years of relevant industry work experience
  • Full time senior-level title
  • Invested $110,000 into retirement accounts
  • Taxable portfolio of about $60,000
  • Downpayment and purchase of first rental property

Now, as an undergraduate still in college, or a fresh graduate just starting grad school, it’s very difficult, damn near impossible to know the ramifications your actions can have toward your future. Who could fathom the thought that getting more education could actually hinder your future savings potential?

I’ll also admit that I’ve been fortunate so far in my career. With the state of the current economy, I realize how difficult it can be for young professionals to get their careers off the ground. That’s why it’s becoming increasingly important for college students to select the right major that provides strong potential for both high pay and stable employment.

The Results

What I see after 5 years is this: For someone seeking to achieve early financial independence, there is no doubt that it is a better decision to start working immediately. Over the course of 5 years I’ve been able to build my resume with real applicable work experience, be promoted to a senior position, increase my earnings, and most importantly, save a lot of money.

My college roommate still has another full school year to go before he graduates. By the time he graduates, he will be close to 29 years old. Time isn’t something you can get back, and as we all know, the secret to compounding lies in the time!

Whereas my friend will be starting with basically a net worth of $0 and entering the starting stages of his career, I will have already built up a solid foundation. I will also be entering the twilight phase of my high-tech career, getting ready to check out completely. When it comes to traditional retirement savings, even if I were to stop contributing to my accounts today, if I allow them time to compound for 30 years at 8% return, I should have a portfolio valued at over 1 million dollars.

It’s true that my friend will most likely earn more than me in the later stages of his career (of a more traditional 30-45 year career path), but he has a ton of catching up to do. He definitely won’t catch me in time for early retirement. In addition, most employers in the private sector will not pay you significantly more just because you have a higher degree. Employers value work experience more than anything else, and quite frankly, research work at a university is not considered an equal substitute.


By no means am I trying to put down the decision my old roommate made. On the contrary, I think the decision to pursue a Ph.D. is a most admirable one, especially if done for the rights reasons. To pursue one in hopes of securing a higher paying career to fund early retirement, however, is wishful thinking. When it comes to reaching early financial independence, every second counts. And every dollar saved matters.

Obtaining a Ph.D. is a huge accomplishment and something that should be celebrated. However, it isn’t easy to do, takes a great deal of time, and can derail your dreams to retire early. With that said, the pursuit of a Ph.D. is still something that I might elect to attempt in the future. The difference is, I would be considering getting one after I’ve already achieved financial independence.

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Dividend Growth Machine

This is an interesting topic. I think the decision to go to graduate school depends on several factors: – The field in which you want to work – The job you eventually want (which may require a Ph.D.) – Whether you can endure several more years of education – Whether you can afford several more years of education – Whether your undergraduate degree alone can get you a satisfactory job The contrast between you and your old roommate is striking, but I have also seen the reverse situation: There are people who struggled to find jobs right out of college… Read more »

Average Dividend Yield

Where I work, whether you have a bachelor’s, master’s or Ph.D., you make the same salary. So with my bachelor’s, I’m way ahead of others. I was accepted in a masters degree, but in the end I had enough of school. In hind site, I have no regrets.

Financial Samurai
7 years ago

A PhD definitely DOESN’T help in early FI.

I considered it now that I’m FI, but after visiting the dept, profs, etc, I decided a Fellowship is much better.

Brick By Brick Investing | Marvin

Unless you are trying to become a doctor, lawyer, accountant or engineer I see no benefit for attending college. The majority of other professions relies predominantly on skill and work experience so if you are seeking financial independence it’s in your best interest to start working full time as soon as possible. I would encourage to start working as early as 15. That is indeed if you know at that age that you want to become financially independent. I’ve had this argument with my parents numerous times but they are very old fashioned.

Compounding Income
7 years ago

From a FI perspective, no it is not. If I could go back in time I wouldn’t go to college at all! I should have just joined the military and retired with a great pension at 38. Dividends and interest would be icing on the cake.

Earning a bachelor degree was a complete waste of time and money in my experience. I did have a lot of fun and met some cool people though! Oh it did help me land a few jobs I absolutely hated. I guess there is that…

7 years ago

I did a similar analysis comparing myself to a friend who chose to pursue a Master’s degree versus starting working right out of college. My friend is just now starting to work full-time at an inflation-adjusted salary comparable to what I started at…almost three years ago now. What have I done in the last three years? * Three years of relevant work experience * 25% equity in a nice, two bedroom condo * Bought a car in cash * Two years of maxing out my 401(k) and Roth IRA (soon to be three for the Roth IRA) * A small… Read more »


[…] college roommate ate up all that propaganda and enrolled in a PhD program. I almost did as well, and up until around 2009, I was seriously contemplating getting a PhD. Last […]