Discover the Financial Principles of the Bible

Don’t Count On Your Salary to Keep Increasing

Anyone that has been to the grocery store lately, you will notice that prices have been going up. In some cases, prices have been going up a lot. The cost to fill up your car with gas has increased by 37% in the last year.

Unfortunately, few people are seeing their income’s rise in the same way. In fact, many have not received a salary increase in three years. Others were forced to take jobs with lower pay than they had prior to the recession. Still others suffered from across the board salary cuts.

Very few people have seen their incomes rise dramatically over the past couple of years. Yet most people continue to count on their salary to keep increasing.

Even financial advisors assume that your salary will continue to increase by 3-5% each year. Which begs the question – are your retirement goals even achievable?

Data from the U.S. Census shows that people achieve their peak income while in their mid-40’s. After that, you can expect your salary to remain relatively flat.

So if you’re retirement planning is based on earning significantly more money as you grow older, you may want to reconsider. If you can’t count on your salary to keep increasing, then you will need to increase your savings rate to make up the difference.

A good exercise is to assume that your salary will never increase between now and retirement. Can you save enough from your current salary to fund your retirement? If so, then any income increases (and the subsequent savings from that increase) will just be icing on the top of your retirement cake.

Filed in: Careers, Christian Finance, Stewardship

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