At what age do you reach peak earnings?

Apr 17, 2024

Bob Hoffman Blog Image Peak Earnings

For most people in the first and second trimesters of their careers, they assume that their income will continue to climb, year after year. Unfortunately, this is not the case and for most people, their earning potential plateaus and then actually drops in the final trimester.

This is not bad news and for those of us over 50, we realise that our priorities have changed. It is a mixture of several factors including, perhaps having successfully raised children, who have probably vacated the nest. As well as realising that health is wealth and the adage that nobody ever engraved on their tombstone, ‘I wish I had spent more time in the office’.

There is a stark change in people’s perceptions of corporate culture over 50 years of age. People tend to look back at their career and miss some of the jobs they had at the beginning or middle of their career, which were more factory floor and grassroots type of jobs. In other words, the red tape, corporate politics and endless re-orgs tend to reduce their enthusiasm for ‘Big Business’ and they migrate towards positions with more purpose and reward albeit with less stellar payslips.

Although the following data is for the UK, it would not be hugely different here in Ireland. People are 47 before they reach peak earnings, data for 2023 shows – a huge increase from five years ago.

It comes as people retire later and younger people struggle on the lowest wages.
In 2023, this highest average wage (gross median hourly earnings, including overtime) was £18.78 per hour.

Vista Search At what age do you reach peak earnings

 

The UK’s Office for National Statistics (ONS) said: “While the age at which earnings peak has changed, the overall trends in earnings throughout a person’s working career have remained very similar.
“Young people earn the lowest hourly wage, people aged between 30 and 50 earn the most and median hourly earnings fall from around age 50 until retirement.

“Whilst median earnings fall between age 50 and retirement, this does not mean that individuals’ pay will decrease.

“Higher earners may retire early, reducing the median wage of those remaining in employment, and people may change roles and hours worked.”

Retiring later

Again, this probably won’t come as a huge surprise, but people are retiring later.
The age where more than half of people were retired increased from 64 in 2011 to 66 in 2021. ​
There has been a bigger increase in the average retirement age for women (from 61 years in 2011 to 66 years in 2021) than for men (from 65 in 2011 to 66 in 2021).

The ONS says this is because the state pension age for women was increased from 60 to 66 during this time to match men.

Finally, I would like to share one recruitment industry observation on people’s salaries. Everybody has to pay their bills, especially in the current cost of living crisis where most of us currently find ourselves. But in general, when recruiters reach out to candidates about an open position and the candidates’ sole focus is ‘What is the salary?”, they tend not to progress in the process.

Recruiters will often ask what salary a candidate is currently earning and will share a reasonably wide salary band that their client is offering for the role. The reason there is a salary band is to reflect that some candidates will have more experience than others. Once it is established that the candidate’s salary expectations and the client’s salary band are on the same page, the focus must be on the candidate’s desire to learn, grow and ability to deliver the requirements for the job. And of course the ultimate factor, would the candidate be happy in the role.

Bob Hoffman
Source: UK Office for National Statistics, Sky News April 2024

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