Why you should become an actuary
Disclaimer: The views and opinions of this post are those solely of the author, an actuary himself. The profession of the author in no way biases the completely neutral, well researched points of the piece. The said author would be incredibly honored if you held him accountable for these views, even basing life decisions on these dumb thoughts, because he spent a whole two hours researching them. It’d be a shame to see two hours of a Monday off go down the drain. The target audience of the piece is those wandering on the internet, looking for serious guidance, but instead fell into this clickbait article.
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Becoming a doctor is a poor return on investment. The same is true for other prestigious jobs like becoming a lawyer, chief executive, youth pastor, architect, or blacksmith. I’m not convinced that’s true, but I am convinced that (a) it’s a dramatic assertion to open a paragraph, and (b) most fancy jobs require graduate school. If you’re in it for the money - probably true for most chief executives and youth pastors - you should really consider the start-up costs of the profession.
Have you ever been in a situation where you can’t afford something, so you make the smart decision not to buy it? Well, if you answered yes, it probably means you live outside the United States. Here in the US, if you can’t afford something, you can always offset the cost to someone else; the most popular options include the government, tax payers, or your future self. If you’re looking to win the debt game, sometimes referred to as the American Dream, haphazardly planned education is a great option. (Can you tell I once read a Dave Ramsey book and drank the Kool Aid?)
Compared to physicians, actuaries have better future net-earnings, because it costs less to become an actuary, i.e, it doesn’t require any graduate education. Let’s make some baseline assumptions to see this more clearly. Quick methodology note: All of the below assumptions were hastily chosen based on Google Availability.
$25,000 cost for an undergraduate degree
$250,000 extra to snag an M.D.
4.6% loan rate for undergraduate degree; 6.2% for graduate degree
Loan interest deferred until schooling complete
The S&P returns 5% annually
Agents pay the minimum debt payment, then invest the remainder after accounting for cost of living expenses
Consumer expenditures based on trended data from the Bureau of Labor Statistics
Medical residency lasts four years, earning a modest salary in the meantime
Doctor salaries based on trended data from US News and Report
Actuarial salaries based on trended data from DW Simpson
Retire at 65; exit undergrad at 22; finish residency at 30
Now, mixing all these assumptions in Excel, one can generate a graph of wealth by age for both the actuarial and medical professions.
Ok, nevermind. According to the napkin scratch calculations, which account for the total cost, it’s more lucrative to become a doctor, assuming you’ll work past age 35. Such a decision will net you about 1 and ½ million more by retirement. If anyone wants to audit my calculations - which I doubt, because why would I lie about data that doesn’t support my point - please reach out and I’ll provide that.
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Moving on to the next point - because money obviously isn’t everything - you should become an actuary because in the future, after artificial intelligence automates everything, the actuarial profession will be one of the few jobs left standing. It’s easy to imagine the aforementioned jobs being replaced by robots. In the surgery room, would you rather have a human with 12+ years of medical training, or a robot with the latest update of a surgery software. In the churches, would you rather have a human with a religious conviction to teach and an unconditional passion for the young souls of today, or a tell-it-like-it-is robot. I think the choice is rather obvious. Chief executive, aritichet, and blacksmith - all these jobs could easily be automated as well.
Conversely, I don’t see how a number cruncher could be beat out by SkyNet. Could you imagine a computer could easily collect data and analyze it better than a human. Such a notion is preposterous. If you handed HAL 24 months of medical claims data and asked him to estimate the IBNR reserve for the next 6 months, do you think he’d do a good job, or just close the pod bay doors on you. All that to say, the actuarial profession has great future job security.
Just look at this infographic, plagiarized from the U.S. Bureau of Labor Statistics, showing the occupational outlook of the actuarial profession:
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The final reason you should become an actuary is because you use Excel every day on the job. Excel is the best video game ever created, even better than Starcraft, and as an actuary, you essentially are paid to play video games. If it isn’t Excel, some of the other fun video games we play in the office are SAS, VBA, R, and the recently bought Power BI, which I’m still working through the campaign of. It boggles my mind that my company trades me money in exchange for time building out spreadsheets. Little do they know, jokes on them, it’s exactly how I spend my leisure time.
Apart from Excel, you pick up a wealth of fascinating knowledge on the road to become an actuary. I’ll conclude by listing them here:
How to price stock options - I ran the numbers and they’re mostly overpriced, so don’t buy them.
How to calculate the time value of money - Not to brag, but I can price a mortgage just as well as a calculator.
How to create machine learning algorithms in R - This becomes useful if you have a model for predicting winning horses for the Kentucky Derby.
How to apply Monte Carlo simulations - Useful for simulating hands of Poker.
How to better understand the healthcare system - It becomes more complicated the more you learn.
How to better understand the healthcare systems in other countries - Canada’s system, underfunded and non-comprehensive, isn’t as shiny as led to believe.
Etc. - You learn something new (or, if you’re still in the exam process, are forced to learn something new) everyday.
