Income peaks at ages 45-54. Does that include people with a college degree?

[clarkfan1979]

According to government data, peak earning years are 45 to 54. I've also heard the cliff is age 50, but can't seem to find anything on the internet to support it. My FIL was fired and then re-hired into a different position that paid 40% less in his early 50's. However, he doesn't have a college degree. Does the same trend occur for the group with a college degree?

About 1/3 of adults have a college degree and 2/3 do not. As a result, it's statistically possible for an overall trend to not be true for a sub-group consisting of 33%.

This trend occurs when talking about wages keeping pace with inflation. Overall, wages have not kept with inflation since 1980. However, when you look at the sub-group of people with a college degree or higher, wages have kept pace with inflation since 1980.

For people with a college degree, should they expect to be forced into a lower wage in their early 50's? I'm not really worried about it for myself. I was just thinking about society in general. 

[dandarc]

I hope I wind up at a lower wage in my 50's - lol. We've already decided that we like too much fancy-pants stuff to pull the plug now to a $4-5K monthly income.

Thought I might have something to add in terms of actual data here, but this BLS website is down for maintenance at the moment, so not able to read what might be by-age income stats for those with a bachelor's degree but no further. https://www.bls.gov/opub/ted/2024/median-weekly-earnings-of-full-time-workers-with-only-a-bachelors-degree-1541-in-q2-2024.htm

[ROF Expat]

This seems like one of many cases where statistics are significant on a macro scale but mean nothing for any individual. 

Peak earning years being at a relatively later stage in life probably reflects the value of experience for a substantial number of people.  This broad generalization just doesn't mean anything for any specific case.  If a person is great at what they do in an in-demand field, they can probably expect income to increase as they get older.  If they're not great at what they do in a declining field, that might not be the case. 

I think it is like looking at average height or weight or BMI.  These might be meaningful on a population level, but they don't mean anything for me. 

[Cranky]

Probably people start leaving the job market or going part time after 55.

[mistymoney]

I would think the data is publically or easily available to you and you have the skills to figure that out, @clarkfan1979 .

[mistymoney]

the other stat is that women's peak earning years are in their 40s while for men it is 50's.

I have taken a slight bit of personal pride that I myself have bucked that trend and have had a higher or same salary every year since 2002.

Spoiler: show

I am a 58 yo woman, :)

My job seems really secure with no wage reduction in sight and I almost hate to let the sisterhood down by retiring in the next year or so.

But thinking of the head winds I've had career-wise, particularly early on, that trend for women may not be a feature of the future. My DD has had a much easier time getting into professional work with less credentials and work experience than I had had 30 or more years earlier.

so it would be reasonable to think that each birth cohort will have their own patterns as the landscape changes. I expect a lot changes with robotics and AI in the next 1-2-3 decades, and it is worrisome about how that might affect earning potentials.

[Dicey]

My first (friendly) thought was "Who cares?"

Seriously, I only have an AA, therefore, no degree. My earnings took a huge dive at one point in my career (mid-30's), because I escaped the rat race to focus on other Important Life Goals. Once I stepped back on the treadmill, my income increased every year until I FIRE'd at 54.

Random factoid: DH and I just figured out that when we elect to start SS, our income will far exceed anything we ever made in our working years. And that's not counting RMD's or rental income. Crazy!

[wageslave23]

I think some people start retiring or moving to a less demanding role around late 50's and early 60's. But yes, people should be worried about it.  There is no guarantee that you will be as healthy and productive later in life. Plus high wages can make you a target for layoffs - that's what happened to my MIL in her 50's. And any type of turnover or merger or consolidation is going to be a threat to someone in their 50s and 60s. It's pretty hard to get a 6 figure salary when you are starting over at a new company in your 50s. That's the time when companies are looking for a 20 something for half the cost.

[aloevera1]

There are so many assumptions going into the "peak earning years" that I would be really weary to plan anything based on that range.

Assuming one can still work at that age and is not crippled by illness/caring for ill family members...
Assuming one's income is increasing in proportion of number of years in the field...
Assuming one's job is stable and not prone to cyclical layoffs/rehiring sprees...
Assuming individuals maximize income rather than lifestyle factors...

Etc. Etc.

Knowing the projected career trajectory for your own field is much more useful. Essentially, the question we are asking is "When is enough?". Understanding how to ride your own career is much more useful than aggregate data.

[GilesMM]

It would be safest to assume your income drops in your 50s.

[deborah]

There’s a lot of ageism around, especially for women (otherwise you’d expect women’s salaries to peak in their 50s since they tend to take time off to look after children and return to work later - by fifties they’d be experienced and earning more). Many manual workers do start to have injuries build up in their 50s, but, for instance, computing jobs tend to assume that bright young people are a better bet than an older worker, and it’s very difficult for people over 50 to get a job.

[vand]

I'd be surprised if there was much difference between college/non-college in terms age of peak earning age.

I supposed there might be a small advantage to college cohort as they will be dominant in traditional career paths with many levels of seniority to climb, but in my anecdotal experience its what you do on the job that ultimately determines your ceiling, not what grades you got in school.

If anything other factors would skew the stats more - noticeably females entering motherhood. The data all shows that having children is a real brake on your career earnings (as far as overall stats go).

[mistymoney]

I think some people start retiring or moving to a less demanding role around late 50's and early 60's. But yes, people should be worried about it.  There is no guarantee that you will be as healthy and productive later in life. Plus high wages can make you a target for layoffs - that's what happened to my MIL in her 50's. And any type of turnover or merger or consolidation is going to be a threat to someone in their 50s and 60s. It's pretty hard to get a 6 figure salary when you are starting over at a new company in your 50s. That's the time when companies are looking for a 20 something for half the cost.

are referring only to individual contributor roles? Because I don't think that is true of management or even more complex ind contributors. a decade or so of experience can make a huge difference between just learning the ropes, or redesigning where the roes are best placed.

a dif between 20 or 40 years experience, then I would agree.

[ixtap]

My first (friendly) thought was "Who cares?"

Seriously, I only have an AA, therefore, no degree. My earnings took a huge dive at one point in my career (mid-30's), because I escaped the rat race to focus on other Important Life Goals. Once I stepped back on the treadmill, my income increased every year until I FIRE'd at 54.

Random factoid: DH and I just figured out that when we elect to start SS, our income will far exceed anything we ever made in our working years. And that's not counting RMD's or rental income. Crazy!

An AA *is* a degree. While nearly 40% of American adults have a degree, only about 25% have a bachelor's degree or higher.

[FIRE@50]

There are only so many rungs on the corporate ladder. You can't keep getting promoted forever. Most people's careers are going to plateau. It seems pretty logical to me.

[RedmondStash]

I'm not sure if this is a factor, but a lot of women I know switched from high-earning careers to low-paying work they were passionate about in their 40s and 50s. Like, they earned the glamor salary long enough to save up a big nest egg, and then they felt the itch to leave the mercenary corporate world and do good by working with at-risk youth, becoming social workers, doing environmental work, etc. Men may do the same thing, but I've seen it a lot with women.

Plus, health issues often accumulate as you age. So even if you want to keep a heavy-hitter job, you may have to take a step back to part-time or even leave the workforce entirely. Happened to me.

[2sk22]

Many jobs in tech have become unstable in recent times. I know several people with advanced degrees who have found it difficult to stay employed past age 50.

[Dicey]

My first (friendly) thought was "Who cares?"

Seriously, I only have an AA, therefore, no degree. My earnings took a huge dive at one point in my career (mid-30's), because I escaped the rat race to focus on other Important Life Goals. Once I stepped back on the treadmill, my income increased every year until I FIRE'd at 54.

Random factoid: DH and I just figured out that when we elect to start SS, our income will far exceed anything we ever made in our working years. And that's not counting RMD's or rental income. Crazy!

An AA *is* a degree. While nearly 40% of American adults have a degree, only about 25% have a bachelor's degree or higher.

When I was in the workforce, potential employers typicaly wanted a bachelor's degree or better. When I was working at Nordstrom (so I could do other things), I cultivated high-spending customers. I had a highly placed insurance executive on my roster. He once said to me, " If you had a bachelor's degree, I'd hire you in a minute." To which I replied, " I wouldn't want to work for a company that cares more about a degree than what I'm capable of doing."

Having said that, I did just fine without a bachelor's degree, but I had to get creative.

[Turtle]

From personal and immediate family experience, I’d say this is less true for folks with college degrees.  Though perhaps accounting for inflation would make it a bit more flat.

[fuzzy math]

I think my dad realized around age 50 that he had peaked in his earning capacity. He worked in traditional business and once the higher management / VP types being promoted were younger than him he knew he would never climb higher. After that he did become a liability as far as pay vs ageism and he was eventually forced out on disability.

I am pretty disallusioned with that aspect of the working world and have watched it play out with other family members and parents. I bet those who are peaking well into their 50s are working for public agencies that have strong anti ageism policies, and where threats of legal action are more morally bound to be investigated.

[Arbitrage]

Mine peaked at 43, since I went part-time/coast-FIRE at that age.  Since then, though my nominal salary has increased annually, my real salary has decreased every year.  I have many college degrees, btw.

Had I not gone remote and part-time, I think my real salary still would've decreased, since my company provided piss-poor "merit increases" during the inflation spike of 2022-2023.  I might've had slightly better raises, since I'd certainly be a more valuable employee, but nowhere near enough to bridge the gap to inflation.  The only way I would've kept up and/or surpassed inflation would've been by pursuing a management track, or possibly if I managed to secure one of the rare technical positions above my current level. 

[mizzourah2006]

Keep in mind this is an aggregate of specific age cohorts. So it's entirely possible that income may be just as high into the late 50s, but if the next cohort is 55-64 it's very likely income is significantly lower at 63 and 64 than it is at 45 and 46 for a variety of reasons.

[roomtempmayo]

I don't know if college is the dividing line so much as people in large institutions (hospitals, universities, government, unionized industry, the military) versus entrepreneurs, contractors, self-employed folks, people in startups, and small businesses generally.

Institutions compress the range of outcomes, pool lots of performance risk, and provide economic ballast in downturns.  They tend to have high longevity.  I think institutionalists are usually going to make steadily more money until they retire.

The more entrepreneurial types of employment have a broader range of outcomes, with individuals bearing more risk, and the financial ups and downs are greater.  They often have more turnover.  Because the range of outcomes is greater, some people will consistently be making more money throughout their careers, but others will suffer a layoff and have to take a lower paying job, or will simply get tired of working so hard and become less productive and make less as they age.

I don't think these categories track the college/no college divide neatly so much as institutionalists tend to have a college degree, although many don't.

[mm1970]

There are only so many rungs on the corporate ladder. You can't keep getting promoted forever. Most people's careers are going to plateau. It seems pretty logical to me.

the other stat is that women's peak earning years are in their 40s while for men it is 50's.

I have taken a slight bit of personal pride that I myself have bucked that trend and have had a higher or same salary every year since 2002.

Spoiler: show

I am a 58 yo woman, :)

My job seems really secure with no wage reduction in sight and I almost hate to let the sisterhood down by retiring in the next year or so.

But thinking of the head winds I've had career-wise, particularly early on, that trend for women may not be a feature of the future. My DD has had a much easier time getting into professional work with less credentials and work experience than I had had 30 or more years earlier.

so it would be reasonable to think that each birth cohort will have their own patterns as the landscape changes. I expect a lot changes with robotics and AI in the next 1-2-3 decades, and it is worrisome about how that might affect earning potentials.

These 2 spoke to me in particular. 
- Personally, at 54, my salary is the highest it has ever been, but partly because I was WAY underpaid before this past year or two.  Like way.  Same for the husband.  We have college + degrees.

- However, I'm going to say that we could just as easily be laid off and have to find a job  in our 50's, and take a pay cut.  It happens.  I think a lot of people think it's not going to happen to them, but it does.

- Now that I think about it - I have worked with executives/ highly experienced people who took paycuts - ON PURPOSE.  Two of my former bosses, when they came to our little startup - had been VP's of larger engineering companies, and took different jobs with big paycuts.  For fun.  To do more fun engineering type work.  (It helps that they could afford to do so - yay for mustachianism!)  And to think about it now, these two particular bosses were in their mid 50's when we hired them.