How the Average American Spends Their Lifetime Earnings by Daniel Wesley


Have you wondered how much you will make in your lifetime and whether you will make enough to sustain your expenses after retirement?

This article will talk about how much money you can expect to make and how much of your income you will spend in your lifetime.

How Does Your Salary Compare to Those of Your Peers?

According to a survey conducted by the US Census Bureau in 2015, the median individual salary of an average American is $33,617.

Based on calculating the average career expectancy to be 40 years and assuming the annual salary to remain static throughout the career, an average individual in United States is expected to earn approximately $1,344,680 in his/her lifetime.

As for couples, the median income is $82,078.

When calculated with the same formula, the average household is expected to earn $3,283,120 in its lifetime.

You probably think that this number is highly inaccurate for aby of the following reasons:

  1. How much you actually make in comparison to that number
  2. The unlikeliness of your salary remaining the same throughout the years
  3. The fact that you may work more or less than 40 years.

You may think these numbers are not relatable to your situation at all, but quite the contrary!

It plays an important role in allowing you to start visualizing how much money you can make in your lifespan and how you measure up against the rest of the country.

If you are over the median range, you are off to a great start.

But if you are below the median, do not be discouraged.

By understanding how various factors can affect your salary earnings, you can work towards a better future.

Breakdown of Average American Salary by Age

One of the reasons that you may earn less than the country’s median annual income range is that you are a relatively fresh employee.

Because age is often correlated with job experience and knowledge/expertise, it is rather predictable that younger workers earn less than older workers.

But the question is how much salary change can you expect in your career?

And can you expect your salary to plateau in a certain age range?

To answer,, let us first look at the median yearly income for various age ranges:

Age Median Yearly Income
16 – 19 $22,152
20 – 24 $27,456
25 – 34 $40,456
35 – 44 $49,244
45 – 54 $52,052
55 – 64 $50,024
65 and over $46,800

Median Yearly Income by Age Range

As illustrated in the graph, the age group between 16 and 19 has a much lower annual income.

This is because the jobs available to individuals in this age range tend to be minimum wage entry occupations that are often related to manual labor workforce.

As seen in the 20 to 24 age group, the wage increase leaps by about $5,000.

This has to do with the number of workers achieving a higher education and receiving much better wages in their early 20s.

Now here is the catch:

According to statistical studies done by the Federal Reserve Bank of New York, your salary in your 20s has a major effect on how your salary will increase in the future.

In essence, the higher your start-off salary is, the more drastically your wages will increase between the ages of 25 and 55 before tapering off until your retirement.

For the average employee, the wage will surge by 38% between the ages of 25 and 55 and then plateau as they shift towards retirement.

Sadly, this only applies to individuals who are within the average range.

Those who remain among the lowest 5% of earners in society actually see a decline in their incomes over the years between the ages of 25 and 55.

You may wonder why.

This is because many of these low-paying jobs are manual, labor-intensive occupations and individuals are much more likely to suffer from physical injuries and to be pushed out of their jobs as they become less productive.

The only individuals who continue to see their salaries surge ahead are those lucky ones who rank in the 95th percentile range of America’s economic status.

These individuals are most likely highly educated professionals such as lawyers, engineers, doctors, technology-related experts, and large business owners.

During their career, they can expect their income to grow 1,500% of their starting wage.

Education Matters

With so many college students so heavily in debt, many people wonder if higher education is really worth the investment.

This debate boils down to whether people with a college degree will earn more than those without a college degree…

The answer is YES.

As mentioned earlier, from the analysis of the wage difference based on age differences, those in the 16 to 19 age group are usually workers who do not have a college education.

There are even individuals within that group that have not graduated from high school.

Relying only on their restricted amount of knowledge and skills, they have a very limited amount of occupation selections.

On the other hand, just by having a college degree, individuals will considerably increase their occupation options and are 20% much more likely to be hired than those who only hold a secondary school diploma.

As of 2015, fresh college grads already earn $5,000 more than workers without higher education.

Over time, the wage gap between the two groups will drastically become wider as the higher schooling group sees a constant wage increase whereas the latter group remains as minimum wage workers of the society.

Debate on High Tuition Fees and Student Loans

For skeptics who raise the problem of student loan debts, here is an analysis of whether a college degree is truly worth your time and money.

According to the data provided by the National Center for Education Statistics, the cost of a 4-year college education averages around $56,000.

In 2010, the cost of the same education deal averaged around $82,000.

Although it seems that the price has soared by 50% over 30 years, many people have not accounted for several factors:

  1. Economic inflation over 30 years
  2. Increase of financial aid available to students that charges a much lower interest rate now than 30 years ago
  3. Increase of scholarships provided to students with great grades and/or who have made great contributions to society
  4. Forgiveness programs available for high-demand occupation degrees
  5. More tax-deductible benefits available for individuals who are paying back their student loans

Just by going over these four factors, one notices the rise of tuition fees is not so drastic after all.

Even though you are required to pay back the student loan, your immediate higher pay and substantial wage increase over time will allow you not only to get out of debt sooner but also to purchase a home faster.

However, if you decide to forego higher education and opt to enter the job environment sooner, even though you may start earning money earlier, you will have less chance of a wage increase.

Over time, that will make you the hare in the money race.

If you are still not convinced, let us take a closer look at the survey conducted in 2016 by the United States Bureau of Labor Statistics.

According to the data:

  • Full-time employees who are 25 years old and over without a high school diploma have a median weekly wage of $494.
  • Full-time employees who are 25 years old and over with only a high school diploma and no higher education have a median weekly wage of $679.
  • Full-time employees who are 25 years old and over with some higher education (e.g. associate’s degree or some college experience) have a median weekly wage of $782.
  • Full-time employees who are 25 years old and over with a bachelor’s degree have a median weekly wage of $1,155.
  • Full-time employees who are 25 years old and over with an advanced degree (e.g. professional training, master’s, and/or doctoral degree) have a median weekly wage of $1,435.

If these individuals work all 52 weeks in a year, their median annual income comes to:

Median Annual Wage Differences by Education Level

If you take a look how much the median bachelor’s diploma-holding individual makes in a year ($60,060), a 4-year education merely costs 1 ½ years of their earnings.

In exchange for the tuition fee, you can climb to a much higher earning status within a shorter amount of time.

If you need even more proof, according to the information provided by U.S. Census Bureau, it is estimated that a master’s degree will earn you about $1.4 million more in lifetime earnings than if you were to hold only a bachelor’s degree.

Solely from this information, we can see that a higher education degree will boost both your starting income and your wage increase over the years.

Hidden Perks of Higher Education Jobs

Something often not mentioned is the added work-related benefits enjoyed by people in higher education jobs.

They can enjoy more paid vacation days, which translates into fewer actual working weeks, than the lower education group does.

Moreover, these individuals also enjoy other work-related benefits such as better health insurance and life insurance plans as well as more money put towards their retirement savings.

All these can decrease their annual expenses and increase the money they can enjoy after retirement.

So unless you are the next Bill Gates, Steve Jobs, or Mike Zuckerberg, attending college is always a great investment to boost your earning power.

Not All Degrees Are Created Equal

Even though a college degree is a crucial factor contributing to a person’s earning advancement prospects, there are a number of things you should know:

  1. Any college degree, associate degree, and even some college education, will allow individuals to earn more than those with only a high school education. This fact is true whether you are comparing income during the start of a career, midway in a career, or at the end of a career.
  2. There is always a discrepancy in salary amongst individuals within the same occupation. Those who are more qualified or trained in a more prestigious college will often receive a pay rate that is higher than others.
  3. There are always exceptions to the rule. Some individuals with only a high school diploma will out-earn those with a bachelor’s or associate’s degrees. And there will be some college graduates who will earn an income that is within the low-income range.
Top 10 Highest Paying Jobs That Do Not Require College Degree
Rank Job Entry Career Wage
1 Janitorial Managers $93,500
2 Auto Body Service Managers $93,400
3 Nuclear Reactor Operators $91,170
4 Transportation, Distribution, and Storage Managers $89,190
5 Aircraft Mechanics $85,200
6 First-line Supervisors of Detectives and Police Officers $84,840
7 Power Distributors and Dispatchers $81,900
8 Elevator Installers and Repairers $78,890
9 Detectives and Criminal Investigators $78,120
10 Commercial Pilot $77,200
10 Lowest Paying Bachelor Degrees 10 Lowest Paying Graduate Degrees
Rank Major Degree Entry Career Wage Rank Major Degree Entry Career Wage
10 Elementary Education Bachelor $34,700 10 Teaching English as a Second Language (ESL) Master’s $40,300
9 Youth Ministry Bachelor $32,900 9 Counselor Education & Counseling Psychology Master’s $40,400
8 Human Development & Family Studies Bachelor $34,300 8 Studio Art Master’s $38,800
7 Therapeutic Recreation Bachelor $35,200 7 Professional Counseling Master’s $39,400
6 Social Work (SW) Bachelor $33,800 6 Reading & Literacy Master’s $40,000
5 Human Services (HS) Bachelor $34,000 5 Divinity Master’s $44,000
4 Child Development Bachelor $32,000 4 Mental Health Counseling Master’s $40,200
3 Early Childhood & Elementary Education Bachelor $34,800 3 Community Counseling Master’s $40,400
2 Child & Family Studies Bachelor $31,400 2 Early Childhood Education Master’s $38,100
1 Early Childhood Education Bachelor $30,700 1 Human Services (HS) Master’s $38,000
  1. The top 90th percentile high school graduates out-earn the bottom 10th percentile of college graduates no matter what major they studied.
  2. Degrees that accentuate measureable specialized skills tend to project the highest earnings. Some examples are engineering, physics, logistics, computer science, finance, and economics.
  3. Degrees that are associated with children education, home economics, religion studies, counselling, social work, and fine arts tend to have the lowest median incomes.

Should People Make the Switch to More Profitable Degrees?

After looking at the earnings data, many people might jump to the conclusion that if they immediately switch to another major, their salaries will make the adjustment and subsequently increase their lifetime earnings.

This assumption is flawed, however, as many other factors can contribute to differences in salary.

  1. Your grades matter. If you make a sudden change, you might not be as well-prepared as other students who have concentrated on the same field since as far back as high school. With much more knowledge and experience (e.g. intern jobs, related volunteer work, awards, and scholarships), they will have better opportunities to score much higher-paid starting positions than you.
  2. You may lack many prerequisites to make the faculty switch. In a worst-case scenario, your college may not offer the program you are looking for.
  3. Your current college may not be known for certain degrees. Even if you make the change, your resume may look less impressive than those of individuals who have graduated from more prestigious programs.
  4. Even if you make the switch right away, you have wasted the last few years and will lose more time in catching up with your peers. By entering the job force later than your peers, your lifetime earnings will be significantly less than individuals who have graduated earlier with relevant work experience.

The truth is that the data presented only shows the median salary calculated from the census survey of all individuals who work full-time in their industry.

It means that 50% of these individuals will earn more than the median and 50% will earn less than the median.

As mentioned before, there is always an exception to the rule.

Depending on your knowledge, credentials, and skills, you have the ability to make much more money than your peers.

What matters is whether your knowledge and skills are in high demand.

For example, a hairdresser is expected to earn about $30,000 as their annual salary.

However, elite hair stylists who work with performers and are top of their game can expect to earn upwards of $80,000.

Dan Wesley is a leading expert in the field of personal finance and founder of

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