Bad News For Men: If You Aren’t Rich By 45 You Won’t Be

Mar 9, 2015
This article is part of a series called News & Trends.

Life may begin at 40, but the question is can you afford it? The bad news is that if you aren’t rich by 45 you have almost no chance of making it.

In a new research report, Federal Reserve researchers from Minneapolis and New York discovered “the bulk of earnings growth happens during the first decade” of work. By that they mean between age 25 and 35. After that, well, “for the median LE (lifetime earnings) group, average earnings growth from ages 35 to 55 is zero.”

After age 45, only the top 2 percent generally experience any significant improvement in earnings.

The researchers used Social Security Administration data dating back to 1978 to analyze mens’ earning trajectory. Women were not studied because their decision to move in and out of the labor market makes a similar analysis more complex.

What they found was that the bulk of a man’s earnings growth comes by the time he is 35. After that, most men see only modest raises, and after 45, those in the bottom 90 percent of lifetime earners see an actual decrease in earnings. In fact, all but a small fraction of men see more than small pay increases once they hit middle age.

The chart, from an earlier research paper by some of the same researchers shows the differences clearly. This one, however, includes women.

Keep this in mind as you ponder your earnings track: the study looks mostly at the earnings history of Baby Boomers and their fathers. Many of them were blue-collar workers whose raises were determined by union contracts or who saw only incremental increases. Today’s workers are both fewer in number and much more likely to be white-collar knowledge workers. How that will affect the analysis only the future can tell.

This article is part of a series called News & Trends.
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