Career advice and retirement may seem like polar opposites of each other. The start of retirement is usually thought of as the end of our career. Yet, wealth accumulation is one of the most important parts of achieving your dream retirement. To generate more income you need to boost the size of your paychecks. Here are three reasons to negotiate your salary this year.
Boost your lifetime income. Each salary increase helps not just at the time of negotiation, but every year after that. Let's say your first job offer was for $30,000, but you were able to nudge the company into giving you $35,000. That first $5,000 is great. But it gets better at your first annual review when everyone is getting a 3 percent raise because your raise is based on $35,000 instead of $30,000. You have gotten a larger raise just because you started at a higher base salary. Some studies have found that these little numbers can add up to half a million dollars over a lifetime.
Build confidence. Having a higher salary helps build your confidence in asking for even more when you get promoted. Generally, the higher your pay, the more your supervisors expect. These additional responsibilities can help your career if you embrace the additional exposure and learning opportunities. As you take on more projects, remember to ask your boss for a raise.
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More flexible work options. When you are in a more important role making more money, it's easier to slow down when you get close to retirement. A retail employee may have a hard time dictating his schedule. But an executive may be able to negotiate for three days a week of work in the years leading up to retirement or set up a lucrative consulting gig with the company after retiring.
The formula is simple: Negotiate for a better salary, save part or all of your pay increases, and, in turn, have more money at retirement.
David Ning runs MoneyNing, a personal finance site aimed at helping others change their habits for a better financial future. He suggests that everyone to sign up for an online savings account to get more out of our hard earned money.