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- Your financial situation is ever-evolving.
- But there are certain ages in life when you’re most likely to reach a peak related to spending, saving, and earning money.
- For example, the average American woman earns the most money of her career around age 40.
Your financial situation is ever-evolving – just like your happiness.
But like your state of mind, your finances are bound to peak at certain times in your life.
To find out what that timeline looks like for the average person, we’ve gathered some research on how Americans spend, save, and earn money.
The graph below pinpoints the age at which you peak at everything in terms of your money.
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Keep reading to learn more about the five financial peaks:
Age 25: You spend the most money you don’t have
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Anyone, regardless of age, can be guilty of overspending. But for the average American 20-something, the propensity to do so is often the greatest.
According to data from the Bureau of Labor Statistics, a 25-year-old’s average pre-tax income is $31,000, while their annual spending is about $33,000.
That means they’re most likely racking up debt – or getting help from Mom and Dad – to cover their expenses.
Living beyond your means is a bad financial habit to adopt, but entry-level salaries, expensive rent, and student loan debt aren’t helping millennials spend less and save more.
Age 40: You buy a home
The typical US homebuyer is 40 and purchasing a home for $200,000, according to Zillow Group’s 2017 housing report.
But 42% of all homebuyers are part of the millennial generation – people between 18 and 37 – and becoming homeowners for the first time.
And many aren’t doing it alone. Nearly 70% of all homebuyers are married or have a partner and earn a median household income of $87,500.
Age 40: Women make the most money of their careers
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Women’s salary growth outpaces men’s up until about 30, when they start having children, then slows down considerably within the next decade, according to research from PayScale cited by CNBC.
College-educated women hit their peak earnings around 40, when their typical salary is about $60,000.
PayScale found that the most common jobs held by American women were registered nurse, elementary school teacher, and human-resources administrator.
Age 49: Men make the most money of their careers
The most common jobs held by American men are software developer, project manager in construction, and computer-systems administrator.
Age 59: Your retirement account hits $1 million
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Reaching millionaire status is usually a dedication to saving. But it’s easier to sock away more money when you have a high-paying job.
On average, women hit the milestone at 58.5, while the average man does so at 59.3, according to a Fidelity Investments report cited by The New York Times. The typical “401(k) millionaire” was an American with a six-figure income – $287,700 for women and $354,600 for men.
But you don’t have to be a high earner to become a 401(k) millionaire. In fact, Fidelity found that saving consistently and investing in the stock market were the keys for those who reached millionaire status while earning less than $150,000.
Ages 65-70: Your net worth is the highest it’s ever been
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Your net worth tends to peak around your mid-to-late 60s – or typical retirement age.
Wallet Hacks found that the median net worth, including home equity, of an American aged 65 to 69 was $194,226 – and that’s not very impressive.
To avoid depleting your savings account, the maximum amount you should withdraw each year during retirement is 4%. Multiply $194,226 by 0.04, and you’re left with $7,769 a year, or less than $650 a month.
Even with the average monthly Social Security benefit, the median American is living on $2,000 a month in retirement income.