Today’s workers reach peak earnings at 38
New data released by the ONS indicates that UK workers reach the peak of their earnings potential at age 38, earning an average of £13.93 an hour. In 1975 workers reached this peak at age 29, earning £7.09 in today’s money.
Accounting for inflation, median wages have increased 87 per cent.
Tom McPhail, head of pensions research at Hargreaves Lansdown, said: “This later peak makes sense in terms of increased participation in tertiary education but also validates the shift towards later retirement, too. The whole adult life journey from education to earning, saving, retiring and spending has shifted further out along the scale.”
For women the story is slightly different. While they earn almost identical wages to men until they hit age 30, a woman hits her peak earning potential earlier at 34. The pay gap for men and women is at 45 per cent by age 49.
In 1975, however, men earned more than women at every age over 17. A woman’s earnings peaked at age 25 and by age 38 she was likely to be paid 61 per cent less than her male counterparts.
While modern workers may be better off than their 1975 counterparts, the ONS notes that real wages peaked in 2009 and have since fallen 11 per cent.
According to McPhail pension contributions to defined contribution schemes are still below 10 per cent, compared to the 16 per cent to 20 per cent being paid into final salary schemes until a few years ago.
McPhail said: “It is striking that whilst earnings and living standards are increasing, our savings rates and retirement provision have been falling steadily backwards.
“Older generations earned less, saved more and lived shorter lives; today we earn more, save less and will live for longer. Further down the line this is likely to lead to a very substantial failure to meet retirement income needs. It is vital that the next government looks at what can be done to build on auto-enrolment and further increase pension participation and savings rates.”