Loading summary
Transcript1 lines
- [00:06]
A
How does your income stack up to other people your age? When will your income most likely peak? And what in fact, does the fox say? I'll answer two of those questions today as I break down the median yearly income by age. But first, a shout out to a partnership that has aged like a fine Bordeaux. My longtime channel sponsor, delete me. Just to make sure we're on the same page. We're talking about income per person, not household. And before taxes, not take home pay. And we're also talking the median income, not the average. That means about half of the people will make more and about half will make less. It's right square in the middle of the ride and everything, everything will be just fine. Okay, let's jump in. With the median income, if you're age 16 to 24, you're fresh out of high school or college, full of big dreams, but light on cash. You've got basically no work experience to bank on, and you're likely looking at entry level positions for your first big boy or big girl job. So it's no wonder the median income at this age is not super impressive. Just over $40,000 a year. Statistically speaking, this is the brokest you'll ever be. So that's the good news. It's all uphill from here. Or downhill, whatever the good one is. Why do they make it so confusing? Okay, downhill. Think about it. No resistance. You're flying, baby. But also, down equals bad, up equals good, but uphill much harder. Make it make sense. Unfortunately, adulthood in America often comes with baggage. Student loans, the car payments, rent for a crappy apartment you're forced to share with a roommate who clips their toenails on the couch. Judson, true story. No one was supposed to know. The upside? You've got something very valuable in this decade. Flexibility in your joints and in life. You're less likely to be married, less likely to own a home, and less likely to have to keep tiny humans alive. Which means if you want to boost your income, you've got the time, the energy and the opportunity to do so. So work the extra shifts, get second or third jobs, keep living with your parents for a longer than desirable season, pick up a side hustle. And if you need some help figuring out a good side hustle for you, I will drop a nifty side hustle quiz down in the description to help you out. This is also the best opportunity to set yourself up for future wealth building. In fact, it takes a shockingly small income to become a millionaire, as my man Carson recently found out. I met him on one of our man on the street videos in Charlotte, North Carolina. He's 18 years old, working part time at Burger King, and he was day trading. And I said, my man, if you just took that energy and even a little bit of this income and rerouted it to investing in something a lot less risky, you could retire a multimillionaire. So I crunched the numbers and his mind was blown. Have I convinced you to shut down the account? Yes, yes. And it's possible for you, too. Live below your means. Get rid of your debt as soon as you can start. Start investing as early as possible after that and you will be just fine. Now, are there more fun things you could be doing in your 20s? Sure. But guess what? The Pokemon convention, believe it or not, will still be there for you in your 40s. I hope it's not, but I fear I am on the wrong side of history on this one or the right side. It's gambling for kids and then those kids turn into adults. Moving on to the median income at age 25 to 34, if the data is to be believed. I'm a big believer in data and in Jesus. This is where you see the biggest overall jump in your by now you've been working for several years. You're hopefully getting promotions and moving up in your career. So the median income for this range jumps to just over $59,000 a year. But wait, there's more. This is also the time you're most likely to get married. And I'll tell you that jump from sink life to dink life. Game changer. If you double the median income, that gives you a household income of $118,000 a year. Which is not the sole reason I got married, but it was a perk. So now you're making more, which is great. But where does all that extra income end? Well, this is the decade where lifestyle creep shows up. You make more money, so you upgrade the apartment, the car, the vacations, and suddenly your goldendoodle is slobbering all over a Tempur Pedic dog bed. Plus, a lot of your income is already spoken for. Your car loan costs you $8,100 a year on average, your student loans another 4,000 a year, your credit cards on average over 2,000 a year. So you end up making more than ever but still feeling broke. And that's in large part due to your debt payments and inflation. Partially thanks Obama. But lucky for you, this is the prime time to create real mom momentum with your income, make some strategic job moves instead of waiting for a raise. Learn skills that will help you make more, negotiate your pay, and do not sleep on side hustles while you still have more wiggle room. The key here is making sure your lifestyle doesn't completely swallow your income. Keep living on less than you make even as your income goes up and wealth building will become a whole lot easier. All right, next up, let's talk median income. If you're 35 to 44, which is where you'll find yours truly. I know I look like a spry 27 at best. Good skincare and I'll tell you there's a lot to love about this decade. You're more established in your career, you're more centered in life, you're more confident, and you just stop giving a hoot what people think. I'm officially in my Larry David era. I don't care. This is also one of your highest earning decades with a median income of nearly $72,000 a year. Unfortunately, this is also one of your most expensive decades. 40 is now the median age for a first time home buyer and your mortgage payment. It'll cost you about 25 grand a year on average. And that home will likely be filled with the pitter patter of tiny little feet pitter pattering your paycheck away. And even though your income is going up, it's going more places than ever. So how do you raise your income when you've got more responsibilities and less flexibility because those hip flexors aren't so flexy anymore? Come on, I'm burning. Well, at this point your work experience is your greatest asset. So use it. If you've been in the same career field for decades now, hopefully you've been promoted into higher paying roles. And if you haven't, this might be the time to get a little introspective into why you haven't seen the growth that you hope for. Maybe it's time for some changes in your role, your company or your career field altogether. Whatever it is, it is worth it because your income is your greatest wealth building tool. And I know a lot of parents dream of staying home with their kids, but depending on your goals and your financial reality, this might be a season where both parents have to work. And while you're raising your income, remember there's a different lever you can pull and that is to lower your expenses. If you looked over your spending, you might get sick to your stomach about how much you're spending on doordash or for my family Costco. Now if you want to make all this forensic accounting a whole lot easier. Just use a budgeting app like EveryDollar. It's the one that my spouse and I use, and you can keep it right there on your phone. Make a plan before the month begins and dial in where all of your income is going. That is the single best move you can do in order to build wealth and get out of this cycle. And there might be some sacrifices made. Maybe you can cut back on eating out. Maybe your kids cut back from three extracurriculars to one. Maybe your weekly Power Rangers needlepoint lesson will have to wait. But more realistically, maybe you've been overpaying on things like insurance, Internet and phone coverage. And that last one's a big one. There's not much reason to fork over a hundred bucks or more of your hard earned money on a phone bill, especially when there are way cheaper options out there with coverage that's just as good. Like Boost Mobile or one of today's sponsors. Their unlimited plan is just 25 bucks a month, and that price is locked in forever. You'll still be paying 25 bucks a month at 40, 50, 60, at which point I assume phones will just be microchipped into our brain. In the meantime, if you have a phone with an esim, which most smartphones do, you can switch carriers without even peeling yourself off the couch. Just go to boostmobile.com Ramsey $25 forever requires customers to remain active on Boost Mobile Unlimited Plan. Now, while it's important to talk about how much money you make, it's just as important to talk about where you save. Most people just pick a bank and stick with it because it's all they've ever known and it feels like a hassle to switch. But when the average savings account pays less than half a percent, your money is growing slower than Moss on a sloth. But High Yield Savings Accounts at Fairwinds Credit Union, another one of our sponsors, earns over 3%, which may not sound like a lot, but it adds up over time and it helps your money keep up with inflation. And right now, fans of this channel, AKA you can get their smart bundle, complete with a High Yield Savings Account fee, free checking account, and their custom Ramsey branded debit card. So make the switch today by going to fairwinds.org Ramsey all right, next up, the median income from age 45 to 54. Now at this point, your hair might be thinning, your kids definitely think you're cringe, and you can't get a grape out of the crisper drawer without throwing out your back. Oh, my back. But take heart, Elder Millennial, because according to the data, these are the best income years of your life. After decades of climbing the corporate ladder and sitting through meetings that could have been emails, the median income tops out. $75,000 a year. Thereabouts. Statistically speaking, this is as good as it gets. Now remember, half of people are making less than this, half are making more. So if you're making around this, you're square in the middle. But this number tells me a few things. With just a $3,000 a year jump over the last decade, you can't waste your income in your 30s expecting to make up for it later. You can't just go, well, for sure I'll be making six figures by my 40s. Maybe, maybe not. You might be nearing the peak of your career and not even know it. And I can say that as a guy who peaked early in height and career. Five' eight, you get taller when you get taller. Plus, you may still be taking care of your own kids while supporting your now aging parents. And that can put a real drain on any disposable income and you might have had. And retirement is not some far off idea now. It's coming soon if you're in this age bracket. So the bigger opportunity here isn't necessarily earning more, it's keeping more. If you've been debt free and investing steadily for years, your income has only one job, grow and help you build wealth. And if you're not, now's the time to get after it, attack the debt, save up an emergency fund and invest more into your retirement accounts. Use these next 10 to 20 years to make your income go as far as it can. All right, next up, the median income. If you're 55 to 64, and much like Kesha and Pitbull, it's going down and we're all yelling timber. And I know that's a dated reference, but that song still hits. And prove me wrong. The median income in this decade dips back down to $70,000 a year. Now, that's not a huge dip from our 75, but there's a few reasons it might go down at this point. As you get closer to retirement, you might want to step back from higher stress roles that often pay more. Or you might be forced to step back due to changes in health or ability. But at this point, retirement is right around the corner, and compound growth doesn't nearly have as much time to work its magic. And that means every dollar of your income really counts in this decade. And at this stage, maybe the kids are out of the house. And that's the perfect time to downsize and free up more money for retirement. Get a smaller house or even an apartment. Sell some stuff that's been chilling in your garage for decades. Cause your kids do not want to deal with it after you're gone. I promise you that. And you might just have to work longer or work more hours than you actually want to keep that income up. Now, the goal here is not to grind forever. The goal now is to retire with dignity. Which takes us to the final age bracket, 65 or older. And the median income at this age bracket, $65,000 a year. Ideally, by now you are work optional at 65 plus. And apparently, as evidenced by every men's locker room, clothing optional. Pop, pop. Listen, keep the towel on, bud. We'd all appreciate it. This is one of the main reasons I don't go to the gym. All right? That, plus my fear of getting ripped. I can't risk it. Can you imagine if I was ripped with this? I can't imagine the world can't handle it. I'm already borderline insufferable without jogging, shirtless, yelling, rising grind at strangers. Not on my watch. Now, by your mid-60s, hopefully, you've been steadily investing for decades, and compound growth has left you with a nifty nest egg to live on. But that's not always the case. Sadly, 74% of people say they plan to keep working after retirement, and 41% say they'll need to keep working just to make ends meet. So if that's where you find yourself, not ideal, but also not hopeless. Here's what you can do. First, wait to take out retirement distributions as long as possible. The longer you delay, the more time you have for that money to keep growing. Now, you can withdraw from your 401ks or IRAs without paying any penalties, starting at age 59 and a half. Now, let's talk about Social Security. This is going to be gravy on top if it's even still there by the time I retire. That chance, buster, you can technically start drawing Social Security at age 62, but your benefit will be lower than if you waited till full retirement age of 67. That's when you can get 100% of your benefit. And remember, whatever time you take it, you are locked in to that payment for the rest of your life, plus some inflation. But here's the deal. If you wait till 70, you get 124% of your Social Security benefit. So you're locking in that higher payment for the rest of your life and long may you live. But here's the truth about Social Security. The average payment is is only about $2,000 a month. That's not going to go very far. Plus, the Social Security trust fund is projected to run out by 2032, which could lower those payments by 22%. That's a big deal, because if you're making two grand a month and all of a sudden 22% is gone, you're talking hundreds and hundreds of dollars that grandma now doesn't have to cover her bills. It's been 84 years, so building your retirement around Social Security is not a plan. It is a wish and a prayer. At the end of the day, at any age, how much you make matters way less than what you do with it. I've met people making 300 grand a year who are living paycheck to paycheck. And I've also met people who became millionaires on a teacher's salary, never making six figures. And if you want to know how they do it, watch this next video where I break down how to become a millionaire even with a low income. Click right here to watch it next or use the link in the description. That's it for today. Thank you for watching.