Every year I get a green, printed Social Security statement in the mail from the federal government. It lists my taxable income for every year I’ve paid taxes. Looking at past earnings is a trip down memory lane. The first jobs at 16, the lean college years, the post college flailing about… my life story in numbers, faithfully recorded by the Social Security Administration.
- It would be useful to take this information and chart your earnings over time to see the trend. I would imagine that if you did this over your expected lifetime you would observe a bell-like curve. From no earnings in youth to a considerable increase then a slowed growth, then inevitably a decline as you approach old age. (I could be wrong here. How would you continue increases in income growth? Invest an inordinate amount when young?)
- You could also calculate your year over year percentage income growth to keep your career earnings on track. For example, if you experienced 15% in annual growth for several years and then observed a decrease in growth or even negative growth you might consider retooling your skillset or looking for other income growth opportunities in order to maintain your growth trajectory. Income growth is essential in asset growth, though you will have no asset growth if you spend everything you earn.
- It might also be a good idea to keep an eye on average annual income growth on a five year trend. The last five years are probably a better guide to your income growth than what you earned at 16.