This is the age your salary will peak

Salaries are always a controversial topic that people have widely varying opinions on.

Whether a particular salary is considered too high or unfairly low, the reality is that the number will be set by a combination of factors that are not necessarily related to what most people think of as fair.

One of the main factors in determining a salary is experience, and that correlates closely with age.

It not as simple as the oldest people having the highest average salary though. Other factors can outweigh the value of experience.

So, what is the sweet-spot for maximum earnings?

Peak earning years

The 40 to 49 years old range has the highest average salary in the United Kingdom at £54,591, according to Office for National Statistics (ONS) figures.

That compares to the average salary across all age groups being £48,512. It should be kept in mind that raw averages like this can be strongly influenced by small numbers of very high earners pulling the overall figures up.

It is also important to note that the most recent ONS figures are for full-time employees, and do not incorporate other types of workers, or those in part-time jobs.

The biggest earners are not the most experienced or oldest. They are in fact those which are far advanced in their careers, but only in the middle of their lifespans and not yet close to retirement.

This is likely to be the oldest and most experienced group that is still seeking to maximise earnings, be willing to move to a new employer, go for promotions or take on more responsibility, on average.

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Once somebody enters their 50s and above, the statistics suggest some may begin prioritising other things, so are more likely to take slightly lower paid roles than those in their 40s.

Another potential explanation is employers see less chance of them leaving for another role, so are not as aggressive with pay rises and promotions for this cohort. Clearly this does not apply to everyone, it is about the average.

The next highest earning age band

The second highest earning ONS age band is 50 to 59 years-old with an average salary of £53,349, which is very close behind the leading age group.

This is further evidence age and experience are strong predictor of average earnings, with pay rising as people move up the career ladder over time.

It may surprise some people that this age group is out-earned by the band younger than them.

There are likely to be a combination of factors, related to things like their prospects for being snapped-up by competitors versus the 40-somethings or their desire to take on more work and responsibility being slightly reduced on average.

It is also possible employers see them as getting closer to retirement, so are less willing to promote them further and invest in their career development than with under 50s.

The third best earning age group

In third place is the 30 – 39-years-old band with an average salary of £48,421. This cohort narrowly beat the 60 years-old and up group, which had an average of £46,794.

This group is likely to be established in their career, and moving up in seniority during these years.

The data suggests that once the age of 60 comes, the impact of some of this age band working less, but still categorised as full-time, or taking jobs at lower responsibility levels tips the balance.

This all means their greater experience does not collectively earn them more than 30-somethings in the middle of their careers, who are trying to maximise earnings and achieve all the promotions and seniority they can.

What age is your salary likely to be at its lowest?

Here it does become more simple. The youngest adults have the lowest salaries on average.

While it is not surprising that ONS data shows 18 to 21 year-olds have the lowest average earnings at £24,394, the size of the gap to the next age group up is larger than many might think.

The data shows 22-29 year-olds earn an average of £35,760, which represents by far the largest jump between the ONS age bands.

There are many complex reasons for this. It is clear that a few years of experience in the workplace can lead to a big jump in earning power. There appears to be a big difference between the earning potential of somebody with no experience and somebody with even just three or four years.

It is also worth noting that the 18 to 21 range does not include university graduates, as they are too young to have completed degrees.

While the earnings advantage of a university degree has diminished significantly over time, higher paying jobs still tend to be filled by graduates.

When investing, your capital is at risk and you may get back less than invested. Past performance doesn’t guarantee future results.