Advertiser Disclosure: Many of the savings offers appearing on this site are from advertisers from which this website receives compensation for being listed here. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). These offers do not represent all deposit accounts available.

The $977,287 mistake most workers make

By Alaina Tweddale

Imagine you found a lamp with a magic genie inside who offered to grant you an extra million dollars in lifetime earnings. To get it, you simply have to do one thing: ask. Sound ludicrous?

It turns out you don't even need the genie.

In his book "Business Brilliant," Lewis Schiff writes that three out of four new hires accept a salary offer without negotiation. Meanwhile, nine out of 10 human resource managers are willing to offer a higher starting salary -- if they're asked.

The idea is staggering. If most employees fail to negotiate salary but the majority of HR managers are willing to pay more money, then the odds are clearly in your favor if you raise the issue.

The secret to earning more

When planning a savings strategy, advice abounds about how to compare the best money market accounts, pick an online savings account or allocate a retirement plan. What you don't often hear is this simple yet effective tidbit: the more money you earn, the more money you can save.

According to Lori Marcus, executive recruiter and principal at QUAD656, an employee's largest pay increase opportunities happen when moving to a new job with a new company.

"Most large companies offer their employees an annual cost of living increase, which is typically in the 2 to 3 percent range," Marcus says. "When you switch from one company to another, that range can increase to 10 percent or more. You just don't see those increases when you stay with one company."

Over the span of a career, those increases can add up to hundreds of thousands of dollars. To illustrate, let's look at two fictitious workers: Jane and Jack. Each launches a career at age 22 with a $50,000 salary. Each stays with an employer for five years (average tenure is 4.6 years, according to the Bureau of Labor Statistics) before moving on to a better opportunity.

With each new job offer, Jane successfully negotiates for a 15 percent higher salary, while Jack happily accepts the 10 percent bump he's offered. When they each wind down their careers at age 65, Jane's lifetime earnings will have outpaced Jack's by $160,318. That's without adding in any annual cost of living bumps.

Staying with your current employer

Even if you don't switch jobs (which is increasingly rare), salary negotiations can have an even larger effect on your overall earnings. Compounding doesn't just impact your savings account interest; the difference between a 2 percent and 3 percent annual salary increase can add up to almost $1 million over the course of a career.

Let's take another look at our fictitious friends, Jane and Jack. This time, let's assume they both stay with their original employer for the duration of their careers. Jane happily accepts the 2 percent cost of living pay raise offered at each annual review. Jack, on the other hand, uses his negotiation savvy to boost his increases from 2 percent to 3 percent. Jane's salary tops out at $117,159 while Jack's grows to $178,255.

David Larson, professional negotiator and founder of NegotiatingSalary.com, sees the wage difference as part of a "time until retirement" equation.

"Negotiate an extra 1 percent per year and you can retire a full seven years earlier. Negotiate an extra 2 percent and retire 11 years earlier," Larson says. "Twenty minutes of work per year can net you an extra 11 years of retirement."

Won't the boss be offended?

The No. 1 reason people don't negotiate is fear that a job offer will be rescinded or that they'll offend their current boss.

When asked if she's ever seen a hiring manager rescind a job offer, Marcus replied, "No. Not for asking for more money." However, she conceded, "It's all in the approach."

Larson, who has negotiated more than 700 salaries, agrees. In fact, he adds that annual pay increases aren't necessarily meted out to those who deserve them most. Salary increases "are never even," he says. "Most people get nothing. Some people get more. The ones who get more are the ones who know how to convince their boss to give them more."

Be your own genie

If you want to build a bigger nest egg, it pays (literally) to use all the tools that you can. There may not be a genie in your lamp, but you can always learn a few negotiation tricks and make the ask for yourself (or hire a professional negotiator to do it for you). Your wish may just be your HR manager's command.

Advertiser Disclosure: Many of the savings offers appearing on this site are from advertisers from which this website receives compensation for being listed here. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). These offers do not represent all deposit accounts available.