Millennials are hitting their high earning years in their career.
If you’re an older Millennial, congratulations! Although it can be tough realizing you are no longer the youngest generation in the workplace, you are entering your peak earning years. According to the Bureau of Labor Statistics, workers earn the most when they are between the ages of 35 and 54. The biggest jump happens when you move from the 25-to-34 to the 35-to-44 age bracket. This happened for Gen Xers who saw a 20% bump in 2005 and for older Millennials who enjoyed a 22% increase in income when they made the same leap in 2020.
We, as millennials, should all be celebrating! After enduring two recessions and the COVID-19 pandemic (which hit Millennials harder than other age groups), you’ve “earned” it. Except…If you’re like most professionals in their late 30s, you’re probably still paying off your student loans. And if you have children, the cost of their care has risen at twice the rate of inflation. So how do you make the most of your peak-earning years?
Careful Family Planning
According to the Centers for Disease Control, the average age for a mother’s first birth is 27 – a record high in the U.S.— and yet, some worry that this number is driving a trend toward smaller families and a population decline.
The average age of first pregnancy is going up in part because women are choosing to have children in their 30s and 40s. However, the other driver is that young women (with access to more birth control) – teenagers – aren’t getting pregnant at the same rate as teens did in the ‘90s. Plus, the rate of females aged 15–19 giving birth in the U.S. has dropped a whopping 73% since its 1991 peak.
While the decline in birthing could imply less crowded public schools, more intentional planning, or more economic and emotional attention for children, this change is still surprising.
So, if you want to make the most of your peak-earning years, planning for when to have a child is vital.
Be Careful About Home Ownership
Along with taking longer to start a family, millennials are taking longer to buy homes. Although the rate of home ownership amongst Gen Y is rising (as their salaries reflect management roles, last year Experian reported that the typical first-time homebuyer in the U.S. is 34 years old – in 2010 it was 30. Listen, I honor the argument that owning a home can be an automatic savings account and that equity is one of the best ways to increase your wealth. It’s just as someone who witnessed firsthand the effects of 2008’s housing crash, I know that for many, a mortgage was not a wealth builder, but a credit destroyer that drained their savings. Owning a home is a huge commitment. Renting can actually help you make the most of your peak earning years. How? A 2019 ADP study showed people who stay at a job get average annual pay increases of 4%, while those who take new positions get a bump of 5.3%.
Switching jobs often requires relocation and nothing can add to your stress like trying to sell your home even as you pack it up. When you buy a house, experts advise that you need to stay in your home at least five years for it to be a worthwhile investment. Anything less, and data indicates you’re more likely to lose money. Millennials are a famously mobile generation and if you like to travel often, a mortgage may be disruptive for you. Besides, if you're in-office, your commute is likely longer if you own a home in the burbs rather than renting in the city. All of this said, there are of course a ton of good reasons to buy a home; there are just as many not to.
You Might Not Have Peaked
Although I write about Millennials, that doesn’t mean I think of my cohort as a monolith. The generation is composed of people who are individuals who make their own decisions. Yet much of what I read about Millennials or Gen Z is fueled by stereotypes. We aren’t all staring at our phones, obsessed by Insta and TikTok any more than Gen Xers are all about paying their dues at work, nor every Baby Boomer stereotype. So if you feel like you’re falling behind, take a breath. There are lots of good reasons why your income may not peak in your 30s – or later for that matter. You could have gone back to school for a masters. You could be in a profession like the arts where it can take decades to earn a decent living. Don’t despair. It takes time to find a job you love, but once you do, retirement may come later. Although plenty of people over 60 are retiring, their labor force participation rate is far higher than it has been in past decades. I suspect that more than a few of them are still working because they want to continue enjoying their peak earning years for as long as possible.
