Is Spending More Time at Work Worth the Salary Increase?

Work to Death

The path to freedom?

“I mean what good does it do anyone to kill themselves working, because the worms will get you in the end.”
–Dorothy Gish

When I was in the Army, the platoon sergeants in a unit I was in got caught up in a game of one upmanship. They wanted to be in early so they’d be there before the soldiers. That was understandable. Then, though, they got into their own little competition.

They wanted to be there before the other platoon sergeants got there.

At first, it was 5 AM.

Then it was 4 AM.

Pretty soon, they were wheeling in cots into the company offices.

Finally, one of them realized the insanity and put a stop to it, and they started showing up at 6:15 AM instead, 15 minutes before 6:30 PT.

After all, they weren’t getting anything accomplished by being earlier. They were just winning an unspoken contest.

But, sometimes in corporate America, the extra hours do turn into increased success.

When I was at Capital One, almost invariably, the people who had either been promoted ahead of their peers or identified as high potential candidates had one thing in common.

They stayed later and worked more than anyone else.

Sure, some of the cause-effect was appearances. The bosses saw them there working harder than anyone else and ascribed good traits to them. Instead of seeing the 8-5 folks as efficient, the bosses saw them as not committed like the ones who stayed from 7 AM to 8 PM. But, the people who were there 10 hours a day were able to do 25% more work, assuming they stayed on task, than the folks who worked 8 hour shifts. Create 25% more output, and eventually, someone will notice.

One person who noticed this correlation was Dr. Dora Gicheva of the University of North Carolina at Greensboro. She conducted a study evaluating whether spending more time at work led to a higher salary. Her answer was unequivocal.

If you already work more than 47 hours a week, then increased hours has a positive, non-linear relationship with your salary.

What does this mean?

  • You had to already be working 48 hours a week. People who increased their workloads from 40 to 48 hours saw no benefits. It was only from 48 hours/week on that workers got the benefit.
  • There wasn’t a direct hours to pay link. To get 1% more in salary, you needed to work 5 hours a week more, but to get to 2%, you needed about 13 hours a week more. Once you got to 65 hours a week, there really weren’t any incremental benefits to more work.
  • These results are for college and graduate school graduates. The cohort that Dr. Gicheva studied came from people who took the GMAT, so they were already college graduates, and most of them went on to earn their MBAs.

Just how much does increasing your baseline salary by 1 or 2 percent affect your lifetime earnings and chances of success in retirement?

To answer this question, I took an average 22 year old college graduate who made $44,259 per year. This person spent $37,260 at age 22 – 85% of his salary – and saved the remainder. He has a 401k plan that matches 3% of his savings. He invests in equities at 110 – his age and the remainder in bonds. His salary and expenses go up with inflation. He retires at age 66 and receives $2,000 in today’s money in Social Security.

I then ran random 10,000 simulations based on historical stock market and bond returns and inflation rates to answer the following questions:

  • What is the median net worth at age 96 (30 years after retirement)?
  • What is the probability of still having money at age 96?
  • Using the 4% withdrawal rule, at what age could this person retire?
  • How much does increasing the starting salary by 1% or 2% affect the answers to the first three questions?

What did the simulations tell us?

How much does a salary increase affect median net worth?

Median Net Worth at Age 96 From Working More Hours by Fort Worth Financial Planner Hull Financial Planning

The reason that I used the median net worth is that there were some exceptionally high outcomes (hundreds of millions of dollars) that skewed the average high. I wanted to see where the 50% line was: 50% of the people wound up with less money, and 50% wound up with more money.

In this case, the baseline average worker has a median net worth of about $13.4 million. Increasing the salary by 1% led to a net worth of about $15.3 million, and a 2% pay increase led to a median net worth of about $18.5 million.

What is the probability of still having money at age 96?

Will You Still Have Money at Age 96 From Working More Hours by Fort Worth Financial Planner Hull Financial Planning

Our baseline individual still had money at age 96 about 85.7% of the time, which increased to 87.6% of the time after a 1% pay raise and went to a 91.0% success rate with a 2% pay raise.

What is the average age to be able to retire?

Will Working More Hours Allow You to Retire Earlier? by Fort Worth Financial Planner Hull Financial Planning

I defined the age of retirement as the point at which the person had 25x their annual expenses in net worth. Regardless of savings, I had the person stop working at age 65.

Average Minimum
Baseline 59.34 38
1% Pay Increase 58.69 38
2% Pay Increase 57.29 37

A 1% pay increase bought about 8 months of retirement, and a 2% pay increase bought about 24.7 months of retirement. However, the earliest retirement outcomes didn’t change much. This isn’t surprising, as the relatively small increases in salary haven’t had enough time to compound.

What do you have to sacrifice to achieve the salary increases?

Let’s look at the average 40 hour a week worker.

He shows up at 8 AM.

He takes an hour at lunch.

He goes home at 5 PM.

8 hours a day, 40 days a week. No weekend work.

Now, in order to get to that 1% raise baseline, he needs to work 53 hours a week.

If he can’t get up earlier, then he’s going to stay at work until 7:36 PM each day.

Or, he could stay until 6 PM each day and work a full day on Saturday.

To get to the 2% raise baseline, he needs to work 60 hours a week.

That’s showing up at 8 AM and leaving at 9 PM every day.

Or, if he wanted, he could work from 8 AM to 7 PM Monday through Saturday.

I did a similar schedule when I was deployed to Bosnia, for 6 to 9 months straight with no break.

It’s rough. It’s doable, but it’s rough.

If that’s the way that you want to go, then go for it. More power to you. If working 53-60 hours a week for your working career sounds like your definition of misery, there are other ways to achieve a secure retirement and to increase your chances of reaching financial independence early.

What do you think? Nose to the grindstone, or is there a better way? Let’s talk about it in the comments below!

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About Jason Hull, CFP®

Jason Hull, CFP®, is the Chief Technology officer of myFinancialAnswers, an online comprehensive financial planning service.


  1. Michael Solari says:

    Very interesting post. As millennials we watched our parents work very hard and had to make many sacrifices. Work more hours for more pay or less hours less pay but more time with family. It’s tough to find that work/life balance but I think we’re all trying to find what makes us happy.

    • When you’re young, it’s easier to make the time for money trade, even if the marginal value of the incremental money is low. I’ve discovered as I get older, I’m less and less willing to make that trade.

  2. Jason, I’m glad I didn’t read this post when I was on active duty! Although I would have benefited from the wake-up call.

    Your platoon sergeants remind me of submarine nuclear reactor startups. When we were getting underway at 10 AM, doing the timeline meant that we were mustering the Engineering department at 3 AM. We also had a couple guys start their reactor precritical checks & lineups after dinner the night before… and probably little sleep for that duty section.

    You make a good case for negotiating a raise– or better yet, starting a side hustle and building your own business.

    • The battalion and brigade commanders were always working on post when I left, usually at about 6:30 after doing a workout in the gym and grabbing dinner. I realized that I didn’t want that type of lifestyle. It really is a lifestyle decision, because, as I mentioned in the comment to DoneByForty, the incremental pay increase, in terms of hourly wages, is terrible. It’s truly a waste of time, and that time would be better spent either earning more income elsewhere in a side gig or just doing something that made you happy.

  3. Those net worth numbers are shocking…that was my first takeaway. Save like that guy and you’re a millionaire many times over. If only…

    Not to dismiss the obvious benefits of retiring earlier and with more confidence, there is no way I’d be putting in those sort of hours. I’d much prefer to take the path of cost cutting to get to Rome, so to speak.

    • The typical financial planning scenario is save a lot and double your money in the last 7-10 years. What I’ve seen in actuality is that people who are successful in their plans and live like that guy wind up stopping before that last double your money period because they’ve already won the game. They have no true use for double the amount of money and don’t want to work the extra 7-10 years to get there. They’d rather stop working and enjoy the fruits of their labor, so they quit in their late 50s or early 60s rather than keep working until mid-to-late 60s.

      Actually, I think the benefit of working those extra hours is negligible. Unless you get a jump in pay (e.g., a major promotion), then you’re not really getting much more money for the incremental hours that you work. Let’s say that you’re making $50,000 working 44 hours a week. You’ll make $50,500 – a 1% increase – if you work 53 hours a week. You’ll make $51,000 – a 2% increase – if you work 60 hours a week. That makes your marginal wage rate $1.16 for the 1% raise and $1.30 for the 2% raise. You’ll work 20.5% more hours for a 1% pay increase and 36.4% more hours for a 2% pay increase. If you can’t find some sort of side gig that pays you more than that, you’re looking in the wrong places.

  4. Well, giving the *appearance* of coming in early can be almost as effective, yes? Early is for, late is for show.

    • Hey, Andrew – Thanks for commenting?

      I have absolutely no empirical evidence to back up my answer, just my own anecdotal observations. I used to come in early to Capital One because I had a commute of nearly an hour and I didn’t want to get caught in rush hour or in a wreck and be late. So, I’d show up at 7 AM or a little earlier, and I was almost always the first one in within my department. I really don’t think that the people who came in early were perceived as equally hard-working as the people who stayed late. Usually, the people who arrived early, like me, left at 5 PM, and for some reason, the leave at 5 PM impression was the one that stuck. When I sat in on the ratings boards for the forced distributions of employee ratings, people would talk about Bob or Jill staying late and working hard, but I never heard someone talking about Sally or Billy coming in early and working hard. Limited sample size ITT, but for appearances, I’d rather stay late.

      Better yet, I’d rather be my own boss and be measured on the P&L for what I deliver rather than the number of hours I work!