An actuary is a highly specialized mathematician who uses finance theory, probability and statistics, and advanced calculus to determine the probable financial outcome of a company's action. In the simplest of terms, actuaries are mathematical fortune tellers who use the past to predict the future for companies looking to predict their future financial status.
Most actuaries work on either insurance or pension plans, though rarely both. Some work for leading health insurance companies, others work in house for major corporations. Some companies, who cannot afford to keep their own actuary on staff, prefer to use the services of a consulting firm. For hundreds of dollars an hour, smaller businesses can pay a consulting actuary (of either medical or pension specialty) to determine how much money they need to invest in employee benefits plans and to project future costs and/or profits.
To become an actuary, one must graduate from a 4-year college or university, typically with a degree in actuarial science or something similar. As this is a highly competitive and challenging field, many students drop the program in their first years at university. If you do graduate with the degree, you've only just begun.
Even before you graduate, you're expected to begin taking the dreaded actuarial exams. The Society of Actuaries, the largest professional actuarial society, offers a series of exams that increase in difficulty and range in topic. You work your way up from the lower numbered exams to the higher. During the timed exams, you are given a small series of very complex problems to solve using the formulas you've memorized, pencil, scratch paper, and a financial calculator (either designed or approved by the Society). There is no limit to the amount of exams you can take at once, but they are very gruelling so most people take no more than two at a time. The company you choose to work for will allow you to take time from work (typically one hour per day) to study for these exams. As you pass exams, your salary (and billing rate) increase.
But here's the tricky part: it's tough to pass exams, and I'll tell you why. The Society of Actuaries (and the Casualty Actuarial Society, and all the other societies) puts a cap on the number of people who can pass an exam in one sitting. In other words, if there are 1500 people taking Exam 1400, they might say that only 10% will pass. They then take the highest 150 grades and congratulations, those people pass the test. And the others? It doesn't matter how well they've done; they'll have to try again next time. It does not even matter if the top 10% only scored a 3 out of 10. It's not a belief as implied above; it's a fact. The SOA believes this to be a fair practice and makes it common knowledge both before the test and on your results letter.
Once you accumulate a certain amount of exam credits, you become an Associate. More exams, a Fellow. By this point you're earning a six-digit salary, you have your own office, and you're in charge of several other actuaries. Some people can acheive Fellowship in the Society before they're 30; for some, an entire lifetime of exams still isn't enough. Naturally, the field of actuarial science is filled with very bright, very math-driven people. They tend to be very career-oriented, analytical, and hardworking. No, seriously, they're good people; they're just really into their work.
A major reason why "Actuary" is voted so frequently #1 on job rating charts is because of the salary and job opportunities. Do not be fooled, however, into thinking this is an easy job. Being an actuary means having people's financial futures in your hand. One small mistake in a program you're running, one miscalculation and you could potentially distort weeks of work. When your client's corporation of ten thousand needs a pension projection done in three days, you make that happen. And then, there's always the typical actuarial disposition:
What's the difference between an accountant and an actuary?
Accountants have personality.
Small personal note: my mother became an actuary 10 years ago because she loved math and making money. She's now rethinking that position.