Peak Earnings and Financial Planning By Lewis J. Walker, CFP(R)

Are your earnings from work increasing, leveling, or decreasing? That’s a key question as you ponder your personal definition of financial independence.

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 (10/22/14). 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 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 is but 17 years away. 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 “money shot” 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 “wellbeing” 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 wellbeing, 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 in the marital status, family obligation timelines? 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), and saving money often gets harder, not easier. Saving and investing along with debt control should start early. Your financial plan should be written and committed to.

Layoffs have hit those over 50 particularly hard. Sustained unemployment of over a year is a major hit to wellbeing 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. Find a coach to take you further. A 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 wellbeing 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.

Lewis Walker is President of Walker Capital Management, LLC. Certain advisory services offered through The Strategic Financial Alliance, Inc. (SFA). Lewis Walker and Mike Hostetler are registered representatives of SFA which is otherwise unaffiliated with Walker Capital Management, LLC. lewisw@theinvestmentcoach.com

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