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Your Fear of Negotiation is Hurting Your Retirement

November 15, 2019

The common financial wisdom making the rounds these days is that we all need to be saving more money and spending less. While this is true, forgoing the latte isn’t going to move the needle very much on your retirement goals. What never seems to be mentioned is how making more money can have a far greater impact on your retirement than frugality.

For example, say you work for 35 years with a starting salary of $50k and earn modest salary increases of 3% a year. You contribute 10% of your salary to a pre-tax 401(k) earning 6%. When you retire you would (hypothetically) have $860,760. If you negotiated for a higher starting salary of $58k and saved that same 10% your hypothetical 401(k) balance would be $998,481. If you also increased your salary by 5% each year instead of 3%, that balance would be $1,334,160, nearly a half million dollars higher than our original calculation. This is just one very simple imaginary illustration, but it does highlight the impact to your savings of consistently negotiating for a higher salary (or consulting fees) throughout your career.(1)

Women have multiple factors that put them at risk of running out of money in retirement. Many of these factors we have little control over, including longevity risk and time out of the workforce to care for a child, spouse or other family member. The salary that a woman earns while she is working, however, can be negotiated. Because negotiating isn’t in many women’s comfort zone, I consulted with Elizabeth Suárez, a national speaker, coach, and the author of “The Art of Getting Everything”. Ms. Suárez has helped hundreds of women advocate for themselves and negotiate successfully for what they want in their professional and personal lives.

Liz Windisch, CFP®: Elizabeth, thank you for speaking with me about salary negotiation and the impact it can have on a woman’s retirement. First, I think many women are afraid to negotiate their salary for fear of looking ungrateful or greedy. But, don’t most employers expect you to negotiate your salary?

Elizabeth Suárez: In most cases employers expect a candidate to negotiate a salary offer. Normally employers don’t offer the highest possible salary range. Based on a study conducted by, 84% of the employers interviewed said they expected for every job applicant to negotiate salary during the interview stage.

Interestingly, a hiring manager is normally nervous that their chosen candidate might not accept the job offer. They have gone through an arduous interview process and by the time they have chosen the candidate, they are concerned the person could have other offers on the table or their current employer could counter the offer. Additionally, employers don’t want to come across as insulting if they are offering too low of a salary. Therefore, when participating in the interview process you shouldn’t think you are the only one who is nervous and concerned.

LW: So if employers expect candidates to negotiate, how much leeway is typically expected?

ES: This varies. I normally recommend my clients to do some research on the range of salaries offered at the companies they are interested in pursuing. This can be done by visiting websites such as or getting involved with your local chapter of the Society of Human Resources (SHRM). By doing your homework you gain a better understanding of the compensation packages being offered at your location. Once you have this information, you are ready to negotiate your salary.

A formula that helps my clients navigate through a job offer is as follows:

● Take the average of the salaries being offered to other professionals in your field
● Compare your findings with salary tools such as
● Take the highest amount from both and add a 20% value to the number in order to identify a range.
● Therefore, if the highest amount was $100,000, your salary range request would be between $100,000 and $120,000.

LW: What about increasing your salary for a job you already have? What is a reasonable expectation for salary increase in an annual review?

ES: According to the Society of Human Resources, U.S. employees can expect a 3% salary increase in 2019. Additionally, the advisory firm of Willis Towers Watson conducted a study and found that businesses expect to pay their best employees an average raise slightly above 4.5%. However, these are just average raises. In practice, there is not a specific formula. It will all depend on the employer. Therefore, it is imperative to always strive for outstanding performance in order to secure a higher raise.

Because a large performance pay increase is unlikely, I believe the above statistics show how critical it is to negotiate your salary when a job offer is extended. Multiple studies have found that only 36% of professionals negotiate a job offer! Others simply accept the job offer without counter-offering. GenZ (84%) and Millennials (74%) are more likely than other generations to accept a job offer on the spot.

That being said, if you didn’t negotiate a salary that you believe you deserve, or your request for a performance increase was denied, there are strategies you can use to change that answer.

Next Month: What to do when you get a “no” answer on your salary increase request.

Liz Windisch, CFP® has guided women toward overcoming their money fears and mastering their finances for over 15 years. She believes women will not be socially equal until they are financially equal. For more information, please visit or contact her at [email protected].

Elizabeth Suárez is an author, speaker and coach dedicated to helping professionals unleash their potential by transforming them into skilled negotiators and decision makers. For more information, please visit or contact Elizabeth at [email protected].

(1) This is a hypothetical example and is not representative of any specific situation. Your results will vary. The hypothetical rates of return used do not reflect the deduction of fees and charges inherent to investing.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through GPS Wealth Strategies Group, LLC, a registered investment advisor.

Elizabeth Suarez,GPS Wealth Strategies Group, LLC and Aspen Wealth Management are separate entities from LPL Financial.

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Securities offered through LPL Financial. Member FINRA/SIPC. Investment advice offered through GPS Wealth Strategies Group LLC, a registered investment advisor. GPS Wealth Strategies Group LLC and Aspen Wealth Management are separate entities from LPL Financial.

The LPL Financial registered representative associated with this website may discuss and/or transact business only with residents of the states in which they are properly registered or licensed. No offers may be made or accepted from any resident of any other state.
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