Working at McDonald’s has long been considered an entry-level job with low pay. The idea of a McDonald’s employee building up a retirement fund of $1 million may seem far-fetched, but it just might be possible.
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In July 2024, McDonald’s released a statement that all hourly employees earn more than the minimum wage, but it didn’t clarify the exact amount. To determine what it would take to retire with $1 million from working at McDonald’s, using the minimum wage as a guide is a safe approach.
In 2025, the federal minimum wage is $7.25 per hour, which means states with no minimum wage law, like Alabama, Mississippi and South Carolina, must pay workers at least that amount. States like California and New York have very high minimum wages, ranging from $15.50 to $16.50, to match their high costs of living.
This experiment will show how someone making the federal minimum wage could potentially have $1 million when they retire at 65.
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How Can You Become a Millionaire on Minimum Wage?
If you have a job that pays $7.25 per hour, your annual salary would be $15,080, assuming you work 40 hours a week. If you didn’t spend a dime and saved your entire salary, it would take you over 66 years to accumulate $1 million. However, it’s not impossible to become a millionaire because of compound interest.
Compound interest is the interest received from both the initial principal and the interest previously earned on it. For example, if you invest $100 and earn 7% interest over a year, you’ll earn $7 and end up with $107 at the end of the year. If you leave your investment as is, you’ll then earn 7% interest on $107, which is your initial investment and what you earned in interest. For your second year, you’ll earn $7.49, and you’ll enter your third year with $114.49. This might seem like a small amount, but the longer your investment earns interest, the larger the amount you receive each year.
Putting money into a Roth individual retirement account after receiving a paycheck allows you to grow your money over time without paying capital gains tax on your profits. Assuming you earn a consistent 7% annual interest with a 3% rate of inflation, you can retire with $1 million if you begin investing $250 a month, or $3,000 annually, between the ages of 18 and 65. Your investment would break down like this:
19 years old: Interest – $112.57, Total – $3,112.57
25 years old: Interest – $1,671.13, Total – $26,936.38
35 years old: Interest – $6,188.83, Total – $95,992.47
45 years old: Interest – $15,075.82, Total – $231,836.43
55 years old: Interest – $30,231.65, Total – $499,062.07
65 years old: Interest – $66,947.71, Total – $1,024,735.36
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Can Your Mindset Make You Rich?
Investing $250 a month while working a minimum-wage job would be extremely challenging, amounting to almost 20% of your pretax salary. However, it’s also unlikely that someone who starts a minimum wage job at the age of 18 would continue to work in the same role without a salary increase for the following 47 years.
Financial psychologist Brad Klontz believes that when it comes to wealth, it’s all in our heads. Instead of focusing on money itself and how much you have now, taking a broader approach and planning for the future can make you wealthy no matter what you earn. While putting 20% of your income toward retirement may be unrealistic, adopting a rich mindset and investing even a small amount in your future early on will put you in a significantly better financial position.
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This article originally appeared on GOBankingRates.com: How To Become a Millionaire While Working at McDonald’s
