Lately, there has been some interesting data coming out of the records from PayScale.com, the wages website. According to their stats there has been some long term changes happening in how people are being paid these past few years.

Before, it had long been taken as fact that people’s income reached a high point about 5-7 years before they retired, usually around the age of 55 years old. Even though this has long been proven to be true, most people were still surprised when it happened them. This is because most people assumed that their income would continue to rise until the end of their career, and were therefore astonished when they became a normal statistic.

For many of these people they put off saving for retirement when their income was good, assuming it would be easier to save when their income was higher yet; but for too many this time never came.

What was true then, has been modified since the Great Recession. PayScale’s data shows that since 2008 the high income point for the average person has been declining in measurable amounts. Since that time, the average man’s highest year of income is now reported to be 48 years old, and for women it is now down to 39 years old.

Unfortunately, not only has the average age declined for both sexes, so has the amount of income that they obtain in their highest year.

This is being caused by two things happening simultaneously in our economy. The first is the obvious result of so many jobs being moved off shore; and the second reason is actually a result of the first. Ageism is now becoming more and more of an issue because companies can pick and choose which employees they hire, with so many qualified ones competing for those good jobs which remain.

It is true that the employment rate has been steadily dropping the past couple of years, but the new jobs that are being created are at a much lower pay rate than those jobs created in the past.

All this does not mean that we should become depressed and give up hope. Rather, it means we need to become wiser with the money we earn, and at younger age, than those who are have gone before us.

It will be easier for those newly entering the labor force to adopt to these changes, than those in who are in the second half of their career; because too many older employees will continue to believe that the changes are only temporary – but they are most likely not.

For the average worker, they will need to modify their thinking quickly if they are going to be able to retire with a reasonable retirement income level.

It means that they will need to save more from their reduced income, and sooner, as it will not work for them to put off saving for retirement when things are better. For too many of us these better days will never come and we need to start acting like this is true.

This way, even if things do improve, it will be a pleasant surprise, instead of the type of surprise that will be waiting for the majority.

The Loan Arranger

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