Your guide to becoming an actuary

What is an actuary?

Are you thinking about becoming an actuary? Maybe you’re not sure what’s involved.
Actuaries apply advanced knowledge of mathematics and statistics to help people draw conclusions about situations involving risk. Actuaries use computer programs to perform detailed calculations that allow them to understand the likelihood of specific events such as:

  • Illnesses
  • Accidents
  • Death
  • Investment outcomes
  • Natural disasters
  • Consumer demand

Actuaries use software to generate graphs and reports that display the results of their computations. Their work allows companies to assess risk and make decisions about marketing, investing, prices of insurance policies, and stock offerings. In this way, businesses can remain stable in a rapidly changing market. If statistics, data analysis, and risk assessment appeal to you, then a career as an actuary may be the perfect fit.

What are an actuary’s job duties? 

Actuarial science involves many specific responsibilities. They include:

  • Collecting statistical data for analysis
  • Estimating the likelihood and potential cost of events such as those listed above
  • Compiling data and results
  • Generating illustrated reports
  • Explaining findings to clients, government officials, shareholders, and business executives
  • Designing, testing, and administering insurance policies, pension plans, investments, and other business strategies to maximize profit and minimize risk

Where do actuaries work?

According to the United States Bureau of Labor Statistics, 71% of professionals in this field work in the finance and insurance sectors. The calculations they devise here relate to property, casualty, life, and health insurance. Actuarial science professionals can also apply their knowledge to retirement plans and investment strategies.

Another 13% of actuaries work for companies that provide technical, scientific, and other professional services. For example, consulting firms may hire them to serve their clients. In this case, they may need to travel to meet with customers.

Actuaries can work for the public sector in government roles. In these positions, they identify economic, financial, and geopolitical risks. They may help evaluate changes to public programs like Medicare or Social Security. Actuarial science professionals can also be self-employed.

How much does an actuary make? 

The answer to this question depends on how long you’ve been in the field and your certification level. Here are some average salaries based on years of experience:

Years of experienceAverage salary
Less than 1 year (entry-level)$61,790
1-4 years (early-career)$78,692
5-9 years (mid-career)$106,524
10-19 years (experienced)$123,686
20 years or more (late-career)$150,518

Combining data from all experience levels, current figures show a median yearly salary of $108,350. Half of the professionals in this position earn less, while half receive more. The highest 10% receive over $193,600, and the lowest 10% take home less than $64,860 per year.

Actuaries in technical, scientific, and other professional services earn a median yearly wage of $110,960. Those in finance, insurance, and government positions also earn over $100,000 on average. Professionals in business management receive slightly less.

In general, actuaries work at least 40 hours a week. This profession’s job outlook is much better than the average, with a projected growth of 18% over the next 10 years.

What skills and education does an actuary need?

You may wish to pursue a career as an actuary if you have a strong mathematics background and enjoy solving complex problems. Actuarial science requires strong analytical and computer skills. Interpersonal communication abilities are also critical for success in this field.

You need to complete a bachelor’s degree to become an actuary. Choose an accredited university that meets national standards of excellence. You may choose to major in mathematics, statistics, actuarial science, or a related field. The coursework in these programs prepares you to enter the workplace and obtain professional certification.

If you hope to become an actuary, you’ll likely benefit from coursework in the following areas in addition to mathematics:

  • Programming languages
  • Use of spreadsheets and databases
  • Corporate finance
  • Economics
  • Statistics
  • Business communication

In general, a bachelor’s degree consists of 120 credit hours and takes 4 years to complete. You may be able to finish in less time if you find an accelerated program or have finished related coursework that qualifies toward graduation requirements. Traditional on-campus programs are available, as are hybrid and fully online options.

Enrollment requirements for undergraduate programs in mathematics, statistics, or actuarial science vary from one university to another. However, you’ll need a high school diploma or GED. Many institutions request a GPA of 3.0 or higher, plus strong performance on the ACT or SAT.

The cost of the degree varies depending on the program you choose. Here are the average yearly tuition amounts for the different choices of major:

Mathematics: Between $6,630 (in-state public school) and $31,467 (out-of-state private university)
Statistics: From $8,618 for in-state tuition at a public institution to $47,942 for out-of-state students at a private school
Actuarial science: Between $8,844 (in-state at a public university) and $35,473 (out-of-state tuition at a private institution)

Financial aid opportunities are plentiful. You can fill out the Free Application for Federal Student Aid (FAFSA) to determine your eligibility for government assistance. Many organizations offer scholarships and grants, too. You can search online for opportunities for undergraduate students in the program of your choice. Schools often provide tips through their financial aid offices.

Professional certifications

There are 2 levels of certification for actuaries: associate and fellow. Two organizations offer programs that lead to full professional status:

The SOA provides certification for actuaries who work in several specific areas. They include:

  • Life insurance
  • Retirement benefits
  • Health insurance
  • Finance
  • Investments

Fellowship certification is available in 5 unique tracks:

  • Life insurance and annuities
  • Retirement benefits
  • Finance/enterprise risk management
  • Group and health benefits
  • Investments
  • General insurance

The CAS certifies actuaries who work with property and casualty insurance. Specific areas include:

  • Automobile
  • Medical malpractice
  • Homeowners
  • Workers’ compensation

In contrast to the SOA, the CAS offers no specialized tracks for fellowship-level certification.

The path to certification

Both of the above societies require specific college coursework for certification. Applicants must also pass 7 exams to obtain the associate credential. The CAS and SOA have mandatory seminars on professionalism as part of a candidate’s certification training. Online courses provide training and prepare actuaries for exams.

Most employers expect job seekers to have passed 1-2 actuary exams to qualify for entry-level positions. Each test requires hundreds of hours of study and preparation. As a result, actuaries typically take 4-7 years to pass all the associate-level certification exams. They usually reach fellowship status 2-3 years later.

Many firms provide support to their actuarial staff during the certification process. They may pay for training material and exam fees. Employers often allow employees to prepare for tests on company time and encourage study groups. Actuaries typically obtain a bonus or raise with each passed exam.

Members of the CAS and SOA must complete yearly continuing education. The 2 societies offer training seminars that can meet these requirements. Employers may also sponsor such opportunities.

Pension actuaries typically need a separate license from the Joint Board for the Enrollment of Actuaries run by the U.S. Department of the Treasury and U.S. Department of Labor. To obtain this credential, professionals must pass 2 exams administered by the SOA and have experience as a pension actuary.

Continuing education

In addition to studies for certification and licensure, some actuaries may choose to obtain a graduate degree. Professionals in this field need only a bachelor’s qualification. Thus, earning an advanced degree can be a way to set yourself apart from others in the job market. A full-time student usually completes a master’s degree in 2 years or a doctorate in 4. The SOA offers a doctoral stipend to students obtaining a Doctor of Philosophy (Ph.D.) who plan to pursue academic careers.

Earning a graduate degree can also prepare you to become a university professor. Postsecondary teachers typically require a doctorate, though some schools hire candidates with master’s credentials. The average yearly wage is $79,540, and duties often include teaching and research.

Typical graduate-level coursework includes topics like:

  • Probability and actuarial mathematics
  • Statistical models
  • Life data analysis
  • Regression analysis
  • Applied time series analysis

Additional career options 

An actuarial science career provides a natural progression through levels of certification. It’s a unique profession since increased salaries and additional responsibilities are built into the advancement structure as you move from trainee to professional status. Through all these pay grades, the employee retains the title of actuary. However, there are a few additional positions to which some may aspire. They include:

Companies may employ a chief actuary who is responsible for the supervision of other professionals. Those with 10-19 years of experience receive on average $192,468 per year in salaries, bonuses, and overtime. Employees with over 20 years of experience earn an average of $225,000 annually.

A chief actuarial officer typically reports to executive leadership and has the following responsibilities:

  • Developing formulas to measure and predict losses and gains in insurance plans
  • Overseeing all aspects of actuarial function in the company
  • Managing a department and making sure that it fits the organization’s needs
  • Developing broad goals to meet company objectives
  • Approving policies developed by departments under their supervision

The median salary for chief actuarial officers is $343,010 per year.