Money Management

Retiring a millionaire on $40,000 a year isn’t easy. But that doesn’t mean it isn’t doable. Here’s how to make it happen. [[{“value”:”

If you earn $200,000 a year, it’s pretty fair to say that you have a good chance of retiring as a millionaire. Granted, sometimes, people who earn really high salaries have to pay a fortune to live in areas where wages like that are available. But for the most part, if you earn a nice wage, your chances of retiring wealthy are probably higher than for people earning less.

If you make $40,000 a year, you might assume that retiring a millionaire is out of the question. But here’s why you’d be wrong.

It’s all about saving and investing consistently

If you’re earning $40,000 as an annual salary, you may not be rolling in money. But if you’re able to set aside a portion of your salary in an IRA or 401(k) for retirement savings purposes nonetheless, you may be surprised at how much wealth you could grow over time.

Let’s make a few assumptions about your financial situation. Let’s say your current $40,000 salary never rises from where it’s at today (unlikely, but it makes our illustration easier).

Let’s also say you’re able to save $200 a month for retirement, which is roughly 6% of your salary, your entire career. That’s not an easy percentage of your income to part with, but it may be possible if you live frugally and manage your paycheck well.

Let’s also assume you invest your savings heavily in stocks and generate an average annual 10% return in your portfolio. That’s consistent with the market’s average over the past 50 years. Finally, let’s assume that you begin saving for retirement at age 22 and stop working at the age of 67.

Want to know what savings balance you’re looking at? Well, contributing $200 a month, or $2,400 a year, toward retirement over a 45-year window means parting with a total of $108,000. But thanks to your investments and compounding returns, the ending balance you’re looking at in this scenario is a rather impressive $1.725 million.

How is that possible, you might wonder? Well, remember, you’re earning 10% on your money each year in this example. But you’re then also reinvesting the extra money you’re earning year after year so that all told, you’re able to accumulate a lot of wealth.

Don’t write off a millionaire’s retirement due to a lower wage

To succeed at retiring with a lot of money, you have to do a few things:

Save consistentlyGive yourself many years to build wealth by investing in a brokerage accountGo heavy on stocks or comparable assets with a history of generating strong returns

If you do these things, you may be surprised at how much money you wind up with — even if your wages aren’t particularly high.

Remember, it’s possible to earn a six-figure income and retire on the brink of poverty. It’s also possible to earn a heck of a lot less and retire with enough money to meet your lifelong goals. If you’re willing to commit to the cause, you may be surprised at how much retirement wealth you end up with — so don’t assume that your senior self is doomed just because you’re a lower earner.

Where to invest $1,000 right now

When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has nearly tripled the market.*

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Want to get a pay raise in 2024? Learn why now could be a good time to ask for a promotion or higher pay. [[{“value”:”

Pay raises might be slightly harder to get in 2024. There’s been some recent softening in the labor market — even though unemployment is still low, new job growth is slowing down. And employers might be tightening their purse strings.

According to December 2023 data from the Mercer QuickPulseTM – U.S. Compensation Planning Survey, U.S. employers are planning to increase their budgets for pay raises by an average of 3.8% for total compensation increases and 3.5% for merit increases. The average budget for total compensation increases is down slightly from 3.9% earlier in the year. However, there could be better chances of a pay raise for certain industries and for people getting promoted.

What does this mean for your pay raise in 2024? Let’s look at some surprising stats about the current landscape of pay raises and how you can boost your pay and improve your personal finances.

1. 10% of workers could get a promotion in 2024

The Mercer survey found that employers are planning to promote about 10% of the total workforce in 2024. Half of employers have an existing salary and wages budget or usual expense process that they use to cover pay increases for promotions.

What this means for your pay raise in 2024: Getting promoted is not some rare, impossible, unheard of event! Lots of people work hard every day and deserve a chance to move up. About 1 out of 10 workers nationwide can expect a promotion in 2024, and 50% of employers already have promotions built into the budget. Don’t assume that your company “can’t afford” to promote you or give you a pay raise; it’s part of the cost of doing business, and businesses are planning for it.

2. Average promotion pay increase: 9.2%

According to the Mercer survey, the average pay increase for a one-level promotion is expected to be 9.2%. So for example, if your current salary is $60,000 per year and you get an average promotion, you should expect your new salary after the promotion (and pay hike) to be about $65,520.

What this means for your pay raise in 2024: If you’ve been taking on extra responsibilities, covering for absent colleagues, and generally holding the universe together at your company, 2024 could be a good time to ask your manager for a promotion. Ask for a bigger pay raise, a new job title, and the other perks of moving up at the company. Remember: 9.2% is just the average pay raise for a promotion. Some people could get a lot more than that.

3. 50% of employers were planning off-cycle pay raises in 2023

In a typical year as an employee, at many companies and organizations, you get an annual performance review and an annual pay raise. Your pay raise will be based on how you’re performing at your job, how your employer is doing, the state of the global economy and your industry, your department’s budget, and more.

But when the job market is strong, like it was in 2022 and 2023, companies get nervous about losing good people to other employers. And they might be more likely to offer “off-cycle” pay raises — pay increases that happen outside of the usual annual review timeframe. The Mercer survey found that about 50% of employers were planning to give (or had already given) off-cycle pay raises in 2023. Here are the biggest reasons why employers are giving out off-cycle pay raises.

Internal equity

Employers are concerned about pay equity and making sure they are paying people fairly within the company — not accidentally (or as an act of potentially illegal discrimination) underpaying any teams or individuals. Sometimes off-cycle pay raises happen within organizations to help rebalance the scales and provide fairer pay for everyone.

Market adjustments

As the job market shifts, some employees and skill sets become more valuable. If a company finds out that its biggest competitor is hiking pay by 8% for all employees in a certain job class, that means a 4% pay raise isn’t good enough anymore. Employers will often adjust their pay offers during the year if that’s what it takes to keep the right people with in-demand skills.

Retention concerns

With the past few years of talent shortages and “the Great Resignation,” companies are concerned about keeping top performers. If you’re good at your job and your skills are in demand, your company doesn’t want you to quit. You have options to go get hired by another company or organization, and your boss knows it.

What this means for your pay raise in 2024: Smart employers are constantly trying to think ahead to retain good people — to keep their best performers happy with the company and working hard. Retention bonuses and off-cycle salary increases could be part of your pay raise in 2024.

Bottom line

Don’t assume that you don’t deserve a bigger pay raise or that your employer can’t afford to pay you more. Even with global economic uncertainty, many employers are planning for sizable pay raises in 2024. Your manager and your organization might value you more highly than you think. And right now, with a strong job market, employees have more power than they realize. Don’t give that power away. Have a cordial, open conversation with your boss. Ask for what you deserve, stick up for yourself, and show how you add value and exceed expectations. You’ll be more likely to get a big pay raise — and more money in your bank account — in 2024.

Where to invest $1,000 right now

When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has nearly tripled the market.*

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*Stock Advisor returns as of February 6, 2024

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Buying a home that isn’t on the MLS? There are benefits and drawbacks. Read on to learn more. [[{“value”:”

Buying a home is a challenge these days for several reasons. First, mortgage loans are still expensive to sign. Although mortgage lenders have been lowering their rates since the start of 2024, the average rate on a 30-year home loan is still near 7%, per Freddie Mac. When you combine that with elevated home prices, it can lead to affordability issues.

Another problem is that there isn’t a lot of housing inventory to go around. As such, it’s still a pretty common thing to land in a situation where you’re just one of several interested buyers making an offer on the same home.

That’s why you may want to encourage your real estate agent to try to seek out homes for sale that haven’t yet been listed. And for clarity, when we talk about a home that’s not listed, we’re referring to a home that’s not on the MLS (multiple listing service).

The MLS is a marketplace for home sales. Real estate agents commonly list homes on the MLS for visibility so other agents and buyers can find out they exist.

You may be eager to buy a home that hasn’t yet been listed. But here are some benefits and drawbacks to going this route.

Pro No. 1: Being able to make an offer on a home before other buyers have seen it

Since housing inventory is lacking, there’s a lot of competition for homes these days. The upside of buying a home that’s not listed is the potential to get first dibs on making an offer. If you don’t have a bunch of competing buyers, you might pay less.

Pro No. 2: Having more negotiating room

Sometimes, sellers are eager to entertain pre-listing offers for a reason. A seller may be willing to come down on price to get their home sold quickly and not have to deal with hosting open houses and interested buyers traipsing through their living space. So you might end up paying less for a home at a time when prices are expensive.

Con No. 1: You might end up overpaying

Sometimes, having competing offers on a home is a good thing, because it shows you what buyers are generally willing to pay. If there aren’t other offers because you’re looking at a home that’s not listed, you risk paying more than you should. Not only might that hurt you financially in general, but you could run into issues with your home appraisal — meaning, it may not appraise at a high enough price for your mortgage to go through.

Con No. 2: Your seller might have odd terms for closing

It’s one thing if you’re getting a sneak peek at a home before it’s listed publicly. But sometimes, sellers intentionally don’t want their homes listed on the MLS at all for different reasons. Those could include privacy or having very unique closing requirements — for example, wanting to find a buyer at present but not close for nine or 10 months. This isn’t always the case when you’re buying a home that hasn’t yet been listed, but it’s a point to consider nonetheless.

All told, if your real estate agent comes across a home that’s for sale but not yet listed — or if you hear about a potential home for sale through a friend or neighborhood chatter — there’s nothing wrong with checking it out. But be mindful of the pros and cons of buying a home before it’s listed. And definitely work with a real estate agent who knows the local market well when coming up with a purchase price. An agent should be able to warn you if you’re about to overpay.

Where to invest $1,000 right now

When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has nearly tripled the market.*

They just revealed what they believe are the 10 best stocks for investors to buy right now…

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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The only thing better than the year-round low prices at Sam’s Club are the regular sales. Check out these deals. [[{“value”:”

I include a Sam’s Club membership as part of my budget because paying that fee actually saves me money in the long run. Not only do I save on everyday essentials, but I also pick up the occasional limited-time deal during one of Sam’s Clubs regular sale cycles.

These extra sales can apply to both Member’s Mark and name-brand items. Here are some interesting picks from the current sales cycle.

1. Member’s Mark 8-Piece Fliplock Pantry Storage

Deal: $6 off

The unfortunate discovery of some residents of the rodent persuasion in my home encouraged us to rethink our pantry storage, and now everything is in bins of some type. While it was a pain in the keister, it turns out having all of our goods neatly displayed in matching containers is actually significantly better than the random assortment of boxes and bags we had before.

Folks considering the same may want to take a look at the Member’s Mark 8-Piece Fliplock Pantry Storage set, which is on sale for $6 off through Feb. 25, 2024. You get four rectangular and four square containers — plus lids; none of this counting-the-lid-as-a-piece nonsense — ranging in size from 1.9 cups to 15 cups, so you can fit everything from snacks to pasta.

Not only are these bins super affordable (especially on sale), but they seem to be of good quality, too. More than 4,500 reviewers have given them 4.7 stars (out of 5).

2. Tramontina 13-Gallon Step Trash Can

Deal: $10 off

This may sound silly, but one of the best splurges we ever made in the kitchen was a top-of-the-line trash can. It was honestly life-changing, in the sense that I haven’t cursed at or been disgusted by my trash can in years.

All that is to say, a good trash can is worth paying a bit more.

The Tramontina 13-Gallon Step Trash Can, currently $10 off, is still a bit pricier than your regular plastic bin from Walmart. However, it’s made of durable stainless steel, has a soft-close lid, and comes with a removable liner bin for easy cleaning. Reviewers seem to like it, too, giving it a solid 4.7 stars across more than 3,000 ratings.

3. Laundry detergent

Deal: Up to $6 off

One of the seven signs of adulthood is probably having a strong opinion about the right way to do laundry. (Dryer balls or bust!) And that includes choosing your ride-or-die laundry detergent brand.

Happily, no matter which brand you love, you can probably get a great deal on it at Sam’s Club any time — and an even better deal right now. Most of the usual suspects are on sale (through Feb. 25, 2024), including Tide, All, Gain, and Persil. For example, you can get my favorite, all Mighty Pacs Laundry Detergent (120 ct.) for just $20.98, which works out to a fantastic $0.17 per load!

4. Vacuums

Deal: Up to $170 off

If you’re already planning your spring cleaning and want to start out with a new vacuum, Sam’s Club is definitely worth a look. The wholesale club has a wide variety of vacuum options, from uprights to sticks to self-emptying robots, all at very competitive prices.

Even before the sales hit, Sam’s Club’s small appliances are usually the same or better than other retailers. Once you add these limited-time discounts — I see deals for up to $170 off — you’ll likely come in well below competitors.

You also enjoy the full weight of Sam’s Club’s generous return policy, which the website sums up as, “Return this item for a full refund or replacement at any time.”

5. Ski pants

Deal: $4.17 off

Given how sturdy snow can seem, it can sometimes be easy to forget an important fact: Snow is made of water. And when you walk through, play in, or fall in the snow, you’re going to get damp.

Waterproof ski pants are for more than hitting the slopes; they can also keep you dry while shoveling, hiking, or just walking the dog. If you’re not practicing for the Winter Olympics, then a pair of costly ski pants from the sporting goods store probably isn’t worth the investment. But an affordable pair of Free Country ski pants from Sam’s Club could be just the thing to stave off the winter wet.

These pants are a steal at their normal price, and downright cheap at the sale price. The quality seems to be decent for the price, too, with reviewers giving the women’s pants 4 stars, and the men’s pants 4.4 stars.

Year-round deals of all kinds

Sam’s Club has a ton of great deals at any given time, so it can be well worth taking the time to check out the sales flyer each month. The wholesaler also does doorbuster and flash sales from time to time, so keep your eyes peeled between regular sale cycles, too.

If you want to really make sure you know about every deal, sign up for email updates (you can do this at the bottom of almost any page at samsclub.com). Your finances will appreciate the heads up on big savings.

Where to invest $1,000 right now

When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has nearly tripled the market.*

They just revealed what they believe are the 10 best stocks for investors to buy right now…

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*Stock Advisor returns as of February 6, 2024

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. Brittney Myers has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Walmart. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.

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Need some guidance to kick off your investing career? Read on to see how to get started. [[{“value”:”

Investing money has proven to be an effective means of growing wealth over time. But if you consider yourself pretty clueless about investing, then you may feel too intimidated to get started.

Recent data from Webster Bank found that 36% of Americans “just don’t know where to start” in the context of investing. If you feel similarly, here are some quick tips to get you on the right path.

1. Choose the right account

Maybe your goal is to invest for the next 10 years and see how it goes. If you’re in your 20s or 30s, you may, in that case, decide to stick to a regular, taxable brokerage account. That way, your money won’t be restricted in any way.

On the other hand, your goal may be to start investing for retirement. If that’s the case, then sticking to an IRA or 401(k) plan through your employer (if one is available to you) makes a lot of sense.

With a traditional IRA or 401(k), you get a tax break on your contributions up to an annual IRS limit, which can change from one year to the next. This year, IRAs max out at $7,000 for savers under 50, while 401(k)s max out at $23,000 for savers in that same age group. For those 50 and over, the IRA limit is $8,000, and it’s $30,500 for 401(k)s.

So, let’s say you know you want to invest specifically for retirement. If you put $5,000 into a brokerage account, you won’t reap any tax benefits. But if you put that same $5,000 into an IRA, you won’t pay taxes on $5,000 of your income. If you fall into the 22% tax bracket, that translates into $1,110 of tax savings this year.

Now that said, with an IRA or 401(k), you risk a 10% early withdrawal penalty if you take funds out of your account before age 59 1/2. So if you think you’re likely to need your money at a younger age, a regular brokerage account is probably your better bet despite the lack of tax breaks.

2. Consider your investment horizon

It’s important to not just consider what you’re investing for, but also, how much time you have between now and when you want to meet that goal. That way, you know how much risk to take on.

If your investment horizon is five years or less, you may want to go a bit lighter on stocks due to the potential for market volatility. If you’re investing for a milestone like retirement that happens to be 30 years away, putting the bulk of your assets into stocks could be a smart move, since you have time to ride out market fluctuations that work against you. You can also benefit from the strong returns stocks have historically been known to generate.

3. Diversify

Whether you’re investing over a shorter period or a longer one, it’s important to have a diverse portfolio. Owning a wide range of stocks could help you minimize losses during periods of market volatility. And it could also lead to stronger returns.

You can go about diversifying in a couple of ways. First, you could research a whole bunch of different stocks and build a portfolio that consists of shares across a range of industries. Or, load your portfolio with broad market ETFs, or exchange-traded funds. The nice thing there is you basically get instant diversification without having to research a whole bunch of different stocks, which can be time-consuming.

If you’re new to investing and aren’t sure how to begin, you’re not alone. These tips should help you get the ball rolling. But there are plenty of more in-depth investing guides available online that won’t cost you a dime. Read through them to familiarize yourself with different concepts and terms so you can feel more confident building your portfolio.

Where to invest $1,000 right now

When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has nearly tripled the market.*

They just revealed what they believe are the 10 best stocks for investors to buy right now…

See the 10 stocks

*Stock Advisor returns as of February 6, 2024

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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