Saturday, February 23, 2008

When are the Peak Earning Years?

As college educated professionals, we spend a lot of time and money preparing for our careers. Yet, many entry level jobs are not that high paying. Of course, we know that if we stick with it and work hard, the potential for salary growth is there and it will eventually all payoff.

So when does earning power typically reach it’s peak? I stumbled upon an interesting graphic relating income and age at Politicalcalculations blog.

The chart identifies the period of a typical U.S. individual's life where they are able to earn the greatest income. The chart is based on 2005 census data and shows the shifts from lower to higher income for the various age ranges. By comparing the various widths of the income strata you can see for instance that the number of low income earners decreases with age, as the low income bands grow narrower as age increases.

It also appears that a majority of the wage earners are in the $30,000 to $50,000 range, as evident by the wide bands in these areas.

Based on this data, it seems that your lot is pretty much cast by the time you are 35. If you are not in the money by that point, (>$50,000) then you will probably not reach the upper income tier. Notice that these wage earners, under $50,000, reach a peak in their 30’s and then start the decline from there. Of course, there are exceptions to every generalization and no one is locked in to any bracket. Your income could possibly cut through many layers of this strata over the life of your career.

As for the upper tier, it is apparent that the peak earning years occur later between the ages of 35 and 54. The number of people earning this high Income increases rather rapidly up to about the age of 35 and then plateaus out to age 54. At that point it starts decreasing - probably due to retirements. It’s also worth noting that there are fewer people in the 45 to 54 age bracket which results in this age group earning the highest income per capita in the U.S.

As you might expect all of the income ranges, low through high, all pretty much end up in the same positions as where they started out. But their paths were very different, as the higher earners have climbed a much higher peak and earned a lot more money during their working years.


  1. I'm glad I have the bulk of my career ahead of me. There's so much more to do. And congrats on saving over 59% of your income. It's a great feeling to be able to do that much, isn't it?

  2. Things aren't as bleak as you might imagine for those getting older when it comes to earning greater income. Here's a comparison of how income is generally distributed for individuals in 1995 and their ten years older counterparts in 2005.

    P.S. Thanks for linking - although to be honest, I don't use that style of chart very often to show complex data, as it has been described, accurately in my view, as "rainbow colored vomit."

    Not very reader friendly - and absolutely not for close inspection!

  3. I wonder if the effort involved to obtain that income rises though, the number of hours, amount of travel, moves necessary, the change of field, the politics involved. Or perhaps it is merely one of perspective going from young brighted eyed and bushy tailed to old jaded and cynical, enjoying the challenges earlier to seeing them as treadmill later. I peaked at 43 and retired rather than step down. No regrets.

  4. Appreciate the comments.

    @fiscal musings: yes, I am thrilled to be saving so much, but it also makes me think I don't really need a job. LOL

    @Ironman: The charts are great! I really get into the charts that are loaded with data. It seems the more you look at it from different perspectives the more trends you can derive

    @Lord: I think my level of effort is the same since hiring in, but my confidence and technical abilites have grown so that things seem easier to me.

  5. That IS interesting. It would be interesting to see figures like these for specific trades and professions, and for wage slaves vs. the self-employed.

    For example, I've always been told that a lawyer's peak earning years occur in his or her early to mid-60s.

    As an academic, I'm certainly earning a LOT more at 63 than I did at 54. Don't know if that's generally true of academics, though--those who don't move from the classroom into administration tend to suffer from salary compression.

  6. I wonder how much the data is affected by all the people that have their first job in something like the military or public service for 20-30 years before retiring. Most people will do that from age 25-50 before getting that pension and moving on to something that pays less but is more enjoyable IF they go back to work at all.

    It would be interesting to see more information like this that includes different factors. Thanks for sharing! :)

  7. As someone else mentioned, the older age group's income decreases probably due to retirements (either retirement from jobs, or retirement from life!).

    While the group's income decreases, the income of a specific individual within the group may continue to grow. Just depends on what life choices people make.