Have you ever wondered how long it would take to earn $1 million on minimum wage? The good news is, it is possible. The bad news, it will realistically take a few decades to reach your goals. This calculator helps you understand this journey based on your hourly wage, work schedule, tax rate and other variable factors.
Time to $1 Million Calculator
See how long it takes to reach $1 million based on your income and work schedule
Default Tax Rates:
- Federal Income Tax: 10% (Lowest bracket)
- Social Security: 6.2% (Fixed rate)
- Medicare: 1.45% (Fixed rate)
- Total: 17.65%
How to use this calculator
- Enter your hourly wage (default is $7.25, the federal minimum wage in the United States). Keep in mind the federal minimum wage might increase during your career. The last time this happened was July, 24 2009.
- Input your weekly work hours (default is 40 hours). This is the standard work-week in the United States.
- Adjust the annual raise percentage (default is 2%). Without annual raises, it will take significantly longer to reach $1 million, as your income remains flat while costs of living typically rise. Play with the numbers to see how many years a % increase can adjust the time horizon.
If needed, customize your tax rate in the advanced settings. I used these numbers in the default settings:
- Federal Income Tax: 10% of annual salary
- Social Security: 6.2% of annual salary
- Medicare: 1.45% of annual salary
So, the total percentage for tax deductions is 17.65% of annual salary.
Even mowing lawns on the side should get you well beyond minimum wage.
Keep in mind I didn’t factor state taxes in the default calculations. My hope is that if you’re making minimum wage, you would get a portion of these deductions returned in the form of a tax refund.
Click “Calculate” to see your results and find out how many decades you’ll need to work to reach your goals in pre-tax, after-tax, and a hypothetical calculation if you were able to reinvest 100% of your net-income into an an investment generating 10.26% returns each year.
The historical performance of the S&P 500 is at 10.26% so that’s why I went with these numbers in the projections. Of course historical performance numbers will change overtime based on real-world performance so your return might be higher or lower than this projection.
Practical lessons from this tool
There are a couple practical lessons I took from researching this tool. Here it is: If you want to reach $1 million dollars faster, you’ll need to focus on increasing your earnings and investing those after-tax dollars.
Earn More
By default in this tool, you can see that if you’re able to find a job making $18.00 per hour instead of $7.25 per hour, you’ll cut the amount of time you’ll need to reach $1 million pre-tax by 40 years!
At this point in time, it’s not super hard to find a job in the United States that pays $18.00 an hour or more. For example, in California fast-food employees now earn $20 per hour.
You can make well above the federal minimum wage even at places like McDonald’s in most of the US.
You may not be able to earn $20 per hour where you live, but you can probably find some readily available work that paying more than the legally required minimum. Bottom line, if you’re making minimum wage right now try to find a job that compensates you better as soon as you can.
Invest Your Earnings
This calculator shows why investing your earnings is a game-changer for building wealth. For example, if you make $7.25 per hour and invest at an average annual return of 10.26%, you could reach $1 million in 23 years instead of a staggering 81 years after taxes. While it’s unlikely you can invest 100% of your earnings (we all have bills to pay), this highlights the power of compound growth in shortening your path to financial freedom.
In the above video, I explore true stories of millionaires who started with low-paying jobs and achieved financial success through long-term investing. While these tales are meant to inspire, I have mixed feelings about them.
Sure, it’s incredible that someone like Ronald Reed, a janitor, could amass $8 million by saving and investing wisely. Or that Grace Groner turned a small stock purchase into a $7 million fortune over 75 years. But let’s be honest, these strategies require decades of patience to pull off.
That’s why I advocate for balance. Yes, automate your investments to benefit from compound growth, but don’t rely solely on investing to carry the load. Look for ways to increase your income now, whether it’s through finding a higher-paying jobs, starting a side hustle, or learning how to sell. You don’t have to choose between building wealth and living your life: I think you can do both.
And don’t forget to have fun while you’re doing it. If you transform making money into a fun or hobby for yourself, I think you’ll have an even better chance at success while being more fulfilled at the same time.
Related tools:
The True Cost of Commuting to Work: This calculator will show how much more wealth you could build by saving money on your daily commute.
How Long Will it Take to Make $1 Million at My Current Job?: Here’s a similar tool I built to help salary and hourly employees estimate the amount of time required at work to hit $1 million.
About the Author: Brett Lindenberg
