Lately, I’ve been thinking a lot about the compounding effects of investing early and how it can be a struggle for those that are younger. There’s another layer in this as well – expected future income.

Is there a way to predict what you will make in the future based on what you make now?

I have become nervous as I’m investigating average income growth between ages 21-65. There’s one detail that shocked me the most. Those that are in the top 25% of income earlier in life will be making 170% more per year compared to the average income earners. That is a gigantic difference.

To break this down:

I did some research across the U.S averages, take this for example:

“Average Joe” who makes $20,000/year in his mid 20’s will hit his highest income in his late 30’s at $50,000/year. If Joe really is average, he will not make more than this for the remainder of his life. Studies show that Joe will most likely be capped out unless he pursues a different career path.

“Dollar Dave” who makes $30,000/year in his mid 20’s (and who is in the top 25% earnings for his age) will hit his income ceiling sometime in his 40’s at $85,000.

That’s a huge difference of $35,000 per year for approximately 25 years. Dave will earn $875,000 more between ages 40-65 and he’ll be able to retire in a lot better of a position than Joe.

What I take from this data:

Income usually peaks around age 40 and does not typically get higher for the remaining working years.

If you’re in the Median income bracket now you will be in the Median income bracket 20 years from now. I don’t want to say some people “have it” and some people don’t (by “it” I mean, the personality and grit to earn more than others), but I do think we allow ourselves to get “stuck” in jobs without good income.

Career Niche is important. Those with specialty degrees or business owners in financially beneficial industries will make the most. It’s easy to get stuck! If you are at a company in your 20’s with no potential growth for more income, your future earning-ceiling could be very low, compared to working for a company with strong growth opportunity.

The earlier you get started with a specialized income job, the more chance you have of earning more in your mid to late life. Just because we all want to be rich in our 50’s does not mean we should expect it. It takes work and intentional purpose to build that sort of life and it starts while you are young.

Here’s some action steps for you:

Look and see if you are below average, the median or the top percentile for income in your area. Use this research calculator here.

Get a plan to earn more. Explore your options for making money within your company, a new educational degree or starting your own side-hustle that can turn into a full time job.

Underpaid at your job and no opportunity? Start networking with friends who do earn more than you. Tell them your goals, ask for their input and advice.

Lastly, don’t become the Median. You can pull yourself out with a solid plan and discipline to make it happen. Fight against becoming the average with all your might.

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