In Your 30s and Still Not Rich? The Odds Are Stacked Against You

A Federal Reserve Bank of New York study reveals that lifetime earnings are largely determined by what you make in your first 10 years.

If you’re 35 years old and you’re not already making the big bucks, it’s fairly unlikely that you’re going to be rich.

That was the finding of a recent report from the Federal Reserve Bank of New York. The research, analyzing the career paths of nearly 5 million workers for 40 years, found that your first 10 years in the workforce will help establish what you will earn for the rest of your working life.

So, if you’re among the many people who believe that hard work will continue to pay off through your lifetime and that you’ll continue to get raises, you could be wrong. Income growth tends to stagnate after you’ve spent 10 years in your career.

“Across the board, the bulk of earnings growth happens during the first decade,” the report’s researchers said.

If you compare the earnings of an average worker to top earners, here’s what you’ll get:

“The median individual by lifetime earnings experiences an earnings growth of 38 percent from ages 25 to 55, whereas for individuals in the 95th percentile, this figure is 230 percent; for those in the 99th percentile, this figure is almost 1,500 percent,” the report stated.

According to The Washington Post, the report revealed that the bottom fifth of American earners, who typically work in physically demanding positions, actually experience a decline in income from 25 to 55 years of age.

Economist and report author Fatih Guvenen told the Post:

Low-skilled jobs tend to use brawn, not brain. Brawn depreciates very quickly. Your back starts to hurt. You become less and less productive. You cannot work as much.

So, the takeaway here is to work your butt off in your 20s and make sure you’re asking for bumps in pay.

How are your lifetime earnings shaping up? Does the pattern identified in this study ring true for your career? Let us know in comments below or on our Facebook page.

For those of us who are not rolling in it, it is all the more important to make our money go as far as it can. That includes smart investing. Watch the video below to see how you can make wise investment choices with your retirement savings. Then check out our Solutions Center for expert advice on all aspects of your personal finances.

Stacy Johnson

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