You are here: Home - Retirement -

Today’s workers reach peak earnings at 38

Written by:
Employees today reach their peak earning potential at age 38, almost ten years later than their counterparts in 1975, according to new data from the Office for National Statistics (ONS).
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.”

Tag Box

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Could you save money with a social broadband tariff?

Two-thirds of low-income households are unaware they could be saving on broadband, according to Uswitch.

How to help others and donate to food banks this winter

This winter is expected to be the most challenging yet for the food bank network as soaring costs push more pe...

Your rights for refunds if travel is affected by strikes

There have been a wave of strikes this year across many different industries, and more are planned over Christ...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week