Are you ahead or behind?
I managed to reach financial independence at age 50. One method I used to help me get there was to compare myself to others. If I was ahead, all was well. If I was dropping behind it meant I needed to either change course or work harder.
I previously wrote about average net worth, as that is my main way to compare myself with others. However, it’s also important to compare your earnings. If you’re making below average, maybe now’s the time to try to get a better job or spend some time gaining new skills.
One point to note about these figures is that they are median earnings not average earnings.
If you’re not sure of the difference, here’s my explanation from a previous article:
Average net worth is calculated by adding up the net worth of everyone and then dividing by the number of people. For example, suppose you have 3 people with a net worth of $85,000, $100,000, and $1,000,000. The total of $1,185,000 is divided by 3 to give an average net worth of $395,000.
What you’ll notice from this is that one person with a huge net worth can distort the figures. If you’re the one with a net worth of $100,000 you might not feel great if you compare yourself to the average.
The median net worth is simply the middle figure when the net worth of everyone is placed in order from lowest to highest. In the above example, it’s $100,000. If you’re the one with $100,000 you’ll probably feel good about it, as half the people have less than you and half have more.
The data for this article is taken from the U. S. Bureau of Labor Statistics. The data is for the second quarter of 2021.
Note that this data only covers full-time wage and salary workers. Many people are either unemployed or working part-time. This data does not include them.
As you would expect, workers in this age group have the lowest median earnings. They are fresh out of school, with limited skills and experience. Many may only be working summer jobs. Median earnings for this group are $555 per week. Men make $595, while women make $501.
Annual median earnings: $28,860
Women: $26,052 (15.8% lower than men)
This is the age range that college graduates join the job market. They tend to earn more than the average worker. Median earnings for this group are $633 per week. Men make $656, while women make $613.
Annual median earnings: $32,916
Women: $31,876 (6.6% lower than men)
At this time of life, workers are gaining more skills and experience. They are also climbing the corporate ladder which leads to higher salaries. Median earnings for this group are $928 per week. Men make $961, while women make $886.
Annual median earnings: $48,256
Women: $46,072 (7.8% lower than men)
This is the age group that is almost at peak earnings. Median earnings for this group are $1,119 per week. Men make $1,242, while women make $968.
Annual median earnings: $58,188
Women: $50,336 (22% lower than men)
This is the age group that has the highest median earnings. However, it’s not much different from either the 25–34 or 55–64 age groups. Median earnings for this group are $1,134 per week. Men make $1,279, while women make $985.
Annual median earnings: $58,968
Women: $51,220 (23% lower than men)
This is the age group earnings slow down slightly. Workers at this stage of life are coming towards the end of their working lives. Median earnings for this group are $1,130 per week. Men make $1,246, while women make $973.
Annual median earnings: $58,760
Women: $50,596 (21.9% lower than men)
Age 65 and over
For this age group, earnings drop slightly. The more well-off workers have likely left the workforce. Those that remain are more likely to be lower-paid and are often working because they don’t have enough saved for retirement. Median earnings for this group are $989 per week. Men make $1,141, while women make $816.
Annual median earnings: $51,428
Women: $42,432 (28.5% lower than men)
Women over 65 earn 28.5% less than men in the same age group.
- The most startling point that stands out for me is how much less women earn than men. While women only earn 6.6% less than men in the 20-24 age group, this gap widens for almost every subsequent age group. Women over 65 earn 28.5% less than men in the same age group.
- For both men and women, median earnings reach their peak in the 45–54 age group.
- Earnings still hold up very well for the over 65 age group. They are only down 11.6% from the peak years of 45–54.
Ways to improve your income and wealth
As mentioned earlier, the above data only includes wages and salaries for full-time workers. These workers could be earning extra money elsewhere, as well as building their wealth.
The above is just an earnings snapshot from one quarter.
To improve your financial situation you could do the following:
- Take extra classes to gain more marketable skills.
- Apply for jobs with higher wages. Moving jobs every few years can help with this.
- Start some side hustles. This is a fantastic way to increase both your income and wealth.
- Invest from an early age. This will pay off big later in life.
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