The income gap in America is growing fastest among 35 to 44 year-olds, according to a new Bankrate.com (NYSE: RATE) report. Within this age group, the divide grew 21% from 1992 to 2012. That is higher than any other age group and more than double the average increase for all age groups (10%).
Ages 35 to 44 are the prime earning years for many people and arguably the most important for solidifying future wealth. There is still time to save for retirement, but financial pressures such as homeownership, children and aging parents abound. So while some members of this group are quickly advancing toward becoming rich, others are just as quickly falling behind.
“These are key transition years,” according to Chris Kahn, research and statistics analyst for Bankrate.com. “Some of the reasons why the income gap is growing so rapidly within this age group are persistently high unemployment, as well as stagnant wages. This stagnation in income, combined with rising prices, is making it more challenging for people to stay in the middle class or move up.”
These years can either build a bridge to a successful retirement or leave people well short of their goals. “We’re seeing a tale of two retirements,” Kahn says. The 65-plus age group has long exhibited the widest income gap, although it only rose three percent from 1992 to 2012.
The income gap among 45-54 year-olds rose 18% over the past 20 years, second only to the 21% increase observed among 35-44 year-olds.
The bottom fifth of American households earn $11,490 annually on average; the next fifth earn $29,696; the middle tier earn$51,179; the next $82,098; and the top tier, $181,905.
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Bankrate.com analyzed the household incomes reported to the United States Census Bureau as part of their Current Population surveys from 1992 to 2012. The ages refer to the age of the primary householder, and the income includes the total household income. Data was analyzed using a set of codes developed by Mark L. Burkey, a professor of economics at North Carolina A&T State University.