Everyone’s career trajectory is different but many find their earnings potential peaks as they approach the middle of life.
Wage data from the Office for National Statistics shows those in their 40s tend to have the highest earnings, with a median of £42,000. Some find that things start to pick up the decade before.
We look at the average salary by age in a separate article.
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More money brings a range of opportunities. It is not just your current spending power that increases, but your ability to invest. That said, balancing things can be difficult.
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“Our 30s are often a time when our income is rising but we may also have big expenses and life changes to fund, like buying a home or starting a family,” said Camilla Esmund, senior manager at investment platform Interactive Investor.
“It’s tempting to park money in cash for ‘safety’, but with time on your side, investing in the markets… can give your future wealth a serious boost.”
In your 30s and 40s, you still have a long investment horizon ahead of you before retirement, meaning it is usually appropriate to take on some investment risk rather than hoarding all your wealth in cash, where it is vulnerable to inflation.
Data from Barclays looking back over the past 120 years or so shows that equities have outperformed cash 70% of the time, based on a two-year holding period. If you extend the holding period to 10 years, it rises to 91% of the time.
With this in mind, we share five tips to maximise your mid-life financial prime – from topping up your pension to paying into an ISA.
1. Boost your emergency fund
Investing is the best way to build long-term wealth, but before you think about the future, assess whether you have enough cash to cover shock expenses that could arise in the here and now.
What if your boiler breaks down or you are suddenly made redundant? Have you got enough cash to fix the problem and plug the gap?
The general advice for working people is that they should keep enough money in an emergency savings pot to cover three to six months of essential spending. Retirees need even more and should target a pot that is big enough to cover one to three years.
“Long periods without an earned income can be financially devastating, which is why a proactive approach can help households weather any unexpected shocks,” said Alice Haine, personal finance analyst at Bestinvest, the online investment service.
When your income goes up, funnel more money into an easy-access savings account to ensure you are able to comfortably meet these guidelines.
2. Top up your pension contributions
It is almost always a good idea to boost your workplace pension contributions above the standard level, if you can afford it. Under auto-enrolment rules, employees typically contribute 5% of their salary to their pension while employers contribute a minimum of 3%.
If you boost your contribution, some employers will up theirs too. “As this is essentially free money, it can be a savvy move, and means your employer is doing more of the heavy lifting,” said Esmund.
Pension contributions are also tax efficient, because you benefit from something called pension tax relief. This means HMRC effectively refunds you the income tax you paid on that money when you earned it.
Tax relief is paid at your marginal rate. If you are a basic-rate taxpayer, it means a £100 pension contribution only costs you £80. Higher rate taxpayers would only need to contribute £60, and additional-rate taxpayers just £55.
Most people underestimate how much they will need for a comfortable retirement, but boosting your contributions in your 30s or 40s when you still have decades of work ahead of you could help keep you on track.
Although the standard contribution under auto-enrolment rules is 8% (employee and employer contributions combined), retirement expert Scottish Widows recommends saving 12-15% as a rule of thumb.
3. Pay into a stocks and shares ISA
You have heard of a midlife crisis, but a midlife ISA is far preferable. As you approach your peak earnings potential, make time to set up a stocks and shares ISA if you don’t have one already.
Pay into it regularly, maximising as much of the annual £20,000 allowance as you can, provided you have already set cash aside for emergencies and short-term savings goals and paid into your pension.
We look at the case for pensions versus ISAs in a separate piece, but the key takeaway is that pensions offer better tax relief while ISAs are more flexible. Most savers and investors use a combination of the two to help them meet their financial goals.
There were 4,850 ISA millionaires at the end of the financial year in 2022, according to the latest HMRC data, obtained through a Freedom of Information request from money app Plum last year.
This number has grown significantly in recent years, highlighting the power of this tax-efficient investment wrapper. The very first ISA millionaire was declared in 2003 – private investor John Lee – having invested a total of £126,000 over the preceding 17 years.
If you start investing in your 30s and 40s and stay in it for the long haul, you too could amass a meaningful sum over time.
“The latest Interactive Investor index shows that investors aged 35-44 have delivered the strongest portfolio growth of any age group over the past five-and-a-half years; proof that this stage of life can be a golden window for long-term investment gains if used effectively,” Esmund said.
4. Start small, investing as little as £25 a month
If you can’t afford to invest a large lump sum of money, or doing so makes you feel uneasy, consider drip-feeding small amounts over time. Several investment platforms allow you to set up a direct debit of as little as £25 per month.
The number of investors drip feeding cash into their stocks and shares ISAs through regular direct debits is up 11% in 2025, according to investment platform Hargreaves Lansdown.
“Because the stakes are relatively low to start with, it’s easier for people to build their confidence by making investment decisions,” said Sarah Coles, head of personal finance at the platform. “Over time, as your income rises, you can boost those monthly investments.”
Investing in regular instalments also allows you to benefit from something called pound cost averaging. It means you buy fewer units when prices are high and more when they are low. This helps smooth out the effects of market volatility.
Find out how to start investing in our beginner’s guide.
5. Make sure you aren’t overpaying on fees
Another good tip is to check what fees you are paying on your investments. Overpaying will erode your returns over time.
Platform fees are one component – these generally range from 0.15%-0.45%. Then there are the individual management fees you pay on funds. All funds cost different amounts based on how they invest, but comparing similar products should give you a sense of whether you are overpaying.
Index funds are generally cheaper than active funds, typically ranging from 0.15%-0.45%. Actively-managed funds can vary significantly, but a ballpark figure is around 0.75%-1.25%. Some investments are more pricey, for example emerging market funds tend to have higher fees.
When making an assessment, remember to focus on value for money rather than pure cost. If a particular active manager has a long track record of delivering strong performance, you might be willing to put up with a slightly higher fee.
Likewise, you might be happy to pay a little more for an investment platform that has better choice in terms of the funds and shares on offer.
We take a closer look in a separate piece: “Investment costs explained”.
