Many American workers are paid an hourly wage, but it's often more convenient to know how much you make on an annual basis. Generally speaking, this is a simple calculation, based on your hourly wage, the number of hours you work each week, and the number of weeks you work each year.
Continue Reading Below
Converting an hourly wage to annual income: The easy version
If you earn an hourly wage, the simple way to calculate your annual income is to multiply your hourly wage by the number of hours you work per week, and then multiply that result by the number of weeks in a year, or the number of weeks you work in a year if you're a seasonal employee.
Image source: Getty Images.
For example, if you earn $15 per hour and work 40 hours per week for all 52 weeks each year, this translates to annual income of $31,200.
Continue Reading Below
*Calculator is for estimation purposes only, and is not financial planning or advice. As with any tool, it is only as accurate as the assumptions it makes and the data it has, and should not be relied on as a substitute for a financial advisor or a tax professional.
Your situation could be a bit more complicated than this
While this sounds easy enough, and it is in many cases, there are a few points to keep in mind.
For one thing, this calculator doesn't take overtime into account. If you're paid time-and-a-half for hours in excess of 40 per week, your actual pay will be more than the calculator indicates. The easy way to adjust for this is to give yourself 1.5 hours of credit for every hour over 40.
As an example, if your standard work week is 45 hours, the five hours you work beyond 40 should be multiplied by 1.5, giving you 7.5 hours of pay. Adding this to the 40 hours for which you are paid your standard hourly wage gives you 47.5 hours. This is the number you should use in the calculator for the most accurate result, not 45 hours.
If your hours tend to vary from week to week, do your best to estimate the average hours you work in the typical week when performing your calculation.
In addition, be sure to consider bonus pay. If you get a $1,000 holiday bonus every December, for instance, that should be considered in your annual income.
Holiday pay is another consideration for many workers. At my first job after college, I was paid for an additional eight hours of time for each of five major holidays, regardless of whether I actually worked on those days or not, so there was an additional 40 hours of pay per year added to my earnings.
Finally, you may have job-specific adjustments that add to your annual income. The point is that hourly workers often have some income in excess of just their standard hourly wage.
The $16,122 Social Security bonus most retirees completely overlook
If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $16,122 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after.Simply click here to discover how to learn more about these strategies.
The Motley Fool has a disclosure policy.