Average Earnings for Individuals Aged 55-64 Unveiled: Is Your Salary on Par with Expectations?

Understanding Your Financial Position Beyond Income

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While income is important, it's not the only indicator of your financial health. Regularly reviewing your net worth can provide a clearer picture of your overall financial standing.

Main Points to Remember

• Data from the Federal Reserve shows that households led by Americans aged 55 to 64 have a median income of $82,150.
• Income levels differ significantly, with homeowners and those holding college degrees earning much more than renters and individuals without a degree.
• Even with a high income, factors like savings, assets, pensions, and outstanding debts play a crucial role in determining your ability to retire comfortably.

The Survey of Consumer Finances reveals that earnings generally increase until midlife, then stabilize as people reach their late 50s and early 60s. Comparing your own financial situation to others in your age group can help you identify strengths and areas for improvement.

Income Trends for Americans Aged 55–64

According to the most recent Federal Reserve survey, the median household income for those between 55 and 64 years old was $82,150 in 2022. This is the second-highest among all age groups, surpassed only by the $91,880 median for those aged 45–54, and is much higher than the $49,070 median for individuals 75 and older. Using the median, rather than the average, helps avoid skewed results from extreme incomes.

This age range often represents peak earning years for many, although some may transition to part-time work, more flexible roles, or even retire during this period.

Why Comparing Income Matters

Looking at how your earnings stack up against others can be informative, but true financial preparedness for retirement depends on a broader view—including your savings, home equity, reliable income sources, and any debts you may have.

Major Factors Influencing Income Differences

The Federal Reserve's latest findings indicate that the median income for all U.S. households is $70,260. However, this number varies greatly depending on homeownership and education. Homeowners report a median income of $94,040, which is more than double the $42,160 median for renters.

Education also plays a significant role. Households led by someone with a college degree have a median income of $117,820. In contrast, those without a high school diploma have a median of $32,430. Individuals with some college education earn a median of $60,530, while those with only a high school diploma have a median income of $52,960.

Although a college degree can boost earning potential, it isn't the only route to financial success. Jason Howell, a family wealth advisor, points out that being diligent and entrepreneurial can also lead to prosperity, whether through starting a business or learning a trade. Trade school, for example, can lead to six-figure earnings in less than six years.

Howell also notes that entrepreneurship, while it may take more time, offers the advantage of controlling your own income. For seasoned professionals, this stage of life can be an excellent opportunity to launch a business in a field where they have developed expertise, such as consulting or skilled trades. With years of experience and still plenty of energy, it's an ideal time to pursue new ventures.

What Net Worth Says About Retirement Preparation

People in their late 50s and early 60s are often considered to be approaching retirement, but as Howell points out, this isn't true for everyone. Many individuals in this age group don't plan to retire at all.

Howell frequently hears from clients in this age bracket who are curious about retirement. They often ask, "When could I stop working if I wanted to? I might not want to, but I’d like to have the option."

When evaluating retirement possibilities, it's not just about how much you've saved. Other factors—such as whether you'll continue earning, receive a pension or Social Security benefits, own your home outright, and your area's cost of living—all play a part.

How to Calculate Net Worth

The Federal Reserve defines net worth as the total value of your assets—including real estate, investments, and retirement accounts—minus all debts, such as mortgages, credit card balances, and personal loans.

Howell cautions that simply focusing on a target savings number can be misleading if you don't consider all the other elements of your financial situation. For example, someone with $50,000 in pension income, $25,000 to $30,000 from Social Security, and $500,000 in savings, who owns their home or plans to downsize, may find that their finances add up well for retirement.

Regularly assessing your net worth helps you understand your financial position. Net worth is simply what you own minus what you owe. According to the Federal Reserve, the median net worth for Americans aged 55–64 was $364,270 in 2022. This figure serves as a helpful benchmark for evaluating your financial security and readiness for retirement.