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Hitting Peak Earnings

Have your earnings from work peaked? A lot of people are seeing their wages max out earlier and earlier. That’s a big problem in the quest for financial security.

London’s The Telegraph newspaper ran an article with a provocative title, “Has Generation X already hit their earnings peak at 35?” by Andrew Oxlade. Data from Britain’s Office for National Statistics indicates that the peak earnings age moved from age 53 for those born in 1958, to age 46, those born in 1968. Will earnings peak at even younger ages? Trends in England appear to mirror those in America.

Since the global downturn of 2008-2009, we have endured a slow growth recovery with wages in general hardly rising at all, and with some not keeping up with inflation. The impacts of technology and global competitive pressures have forced companies to be more nimble with human resources, resulting in increased downsizings and outsourcing. Accelerating trends are impacting older workers in particular.

The oldest members of Generation X, born in 1965 and turning 50 in 2015, have figured out that their full retirement age under U. S. Social Security, when they are eligible for 100% of your benefits, is but 17 years away. (You can get reduced benefits starting at 62 and extra amounts if you wait until 70.)

Seventeen short years ago, he or she was 33, and, “OMG, that seems like just yesterday!” “What will the next 17 years bring, and how will I be ready for a secure retirement?” That is the financial question du jour.

If the age at which your pay peaks may arrive far earlier than in the past, that has major implications for the way you plan your life, save, invest, spend, incur debts and handle what-if decisions like life insurance and other safety nets.

Tom Rath and Jim Harter, authors of StrengthsFinder 2.0, also wrote, Well Being: The Five Essential Elements (Gallup Press, NY; 2010). They define well-being as “the combination of our love for what we do each day, the quality of our relationships, the security of our finances, the vibrancy of our physical health, and the pride we take in what we have contributed to our communities.”  You cannot focus on just one or two of the five elements to excess – there must be balance in your approach.

When it comes to career well-being, they ask: Do you like what you do each day?  The authors say that only 20% of the people Gallup surveyed gave a strong yes to that question. If you woke up this morning and thought, “Oh, rats, I have to go to work,” or on Sunday you dread workday Monday, most likely your earnings peaked some time ago. Coaching resources to help you recalibrate your career and rejuvenate your passion may be the best investment you can make.

Pay attention to life transitions timelines. Where are you concerning marital status and family obligations? As one who has “been there, done that” along with a dedicated spouse – married, raised and educated children, started and built a business – I can tell you that “tomorrow is but a day away” (to quote Annie). Saving money often gets harder, not easier. Saving and investing along with debt control should start early. You should write down your financial plan and stay committed to it.

Layoffs have hit those over 50 particularly hard. Sustained unemployment of over a year is a major obstacle to well-being and one’s sense of purpose, note Rath and Harter. Understanding that lifetime employment security now is a do-it-yourself project, training, education and the upgrading of skills is critical to making it to your financial independence target.

Buy, read and act on StrengthsFinder 2.0, which helps you find out what you are good at, and what you aren’t. Find a coach to take you further.

One strength is natural talent plus knowledge and skills, and only when your work and career reflects applied strengths will you find meaning and fulfillment in what you do. Financial success flows from understanding your inherent strengths and knowing how to develop, sustain and apply them, and often, work effectively with others.

Your pay does not have to peak. Your 50s and 60s can be the best years of your life, when it all comes together. Pay attention to what well-being means to you and the people you love and care for. What part of well-being in your world needs more balance – career, social, financial, physical, family and community?

Essentially, this is life planning, and financial planning is but one facet of an integrated plan. Done right, well-being does not have to peak until the day you depart this planet. And for believers, not even then. Amen.

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Lewis Walker, CFP, is president of Walker Capital Management, LCC in Peachtree Corners, Ga. Securities and certain advisory services offered through The Strategic Financial Alliance Inc. (SFA). Lewis Walker is a registered representative of The SFA, which is otherwise unaffiliated with Walker Capital Management. 770-441-2603. [email protected].

AdviceIQ delivers quality personal finance articles by both financial advisors and AdviceIQ editors. It ranks advisors in your area by specialty, including small businesses, doctors and clients of modest means, for example. Those with the biggest number of clients in a given specialty rank the highest. AdviceIQ also vets ranked advisors so only those with pristine regulatory histories can participate. AdviceIQ was launched Jan. 9, 2012, by veteran Wall Street executives, editors and technologists. Right now, investors may see many advisor rankings, although in some areas only a few are ranked. Check back often as thousands of advisors are undergoing AdviceIQ screening. New advisors appear in rankings daily.

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