finance calculator
Adjust salary increases for inflation to find real income growth.
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Real Raise Status
Real raise rate: +1.45% (buying power grows)
Save this page to quickly verify whether your annual raise increases your real purchasing power or is eroded by rising prices.
Formula
Real Raise = ((1 + Raise%) / (1 + Inflation%) - 1) × 100Adjusts nominal wage increases by the local inflation rate to calculate real purchasing power.
Step by step
Related guides
Guide
Learn how to convert a nominal raise into real salary growth after inflation, using the same formula as the salary inflation calculator.
Site Guide
Learn when to save a DTC calculation locally, when to export to Excel or CSV, when to print to PDF, and how to avoid losing the assumptions behind important results.
Inflation Guide
Learn how annual inflation rates erode your cash savings and wage value over time, and hedge against it.
Summary
Real Raise
+1.45%
After adjusting for inflation
Nominal Salary
$63,000
Dollar amount on your paycheck
Real Salary
$60,870
Actual purchasing power
Buying Power Change
+$870
Annual change in real terms
D3 visualization
Compares your current salary against the nominal new salary and inflation-adjusted real salary.
Guide
An annual salary raise is often viewed as a financial win, but its real value depends on the inflation rate. Inflation represents the rate at which the cost of consumer goods and services is rising. If inflation outpaces your wage growth, your real purchasing power decreases.
To determine if you are actually earning more, you must calculate your Real Salary Growth (adjusting nominal salary increases for the rate of inflation).
To compare your new nominal salary against inflation, apply these equations:
$$\text{Real Salary} = \frac{\text{New Salary}}{1 + \frac{\text{Inflation Rate (\%)}}{100}}$$
$$\text{Nominal Increase (\$)} = \text{New Salary} - \text{Old Salary}$$
$$\text{Real Increase (\$)} = \text{Real Salary} - \text{Old Salary}$$
$$\text{Real Growth (\%)} = \left( \frac{\text{Real Salary} - \text{Old Salary}}{\text{Old Salary}} \right) \times 100$$
For example, if your salary rises from $60,000 to $63,000 (a 5% nominal increase), but annual inflation is 4%, the real value of your new salary is \(63,000 / 1.04 = 60,576.92\). Your real raise is only $576.92, or a 0.96% real increase.
If your annual raise is less than the inflation rate, you have experienced a Real Wage Decline, also known as a loss of purchasing power. Even though your paycheck lists more dollars (nominal growth), those dollars buy fewer goods and services than your previous salary did a year prior.
When negotiating your annual raise, separate performance-based increases from Cost-of-Living Adjustments (COLA). A COLA is designed strictly to match inflation, keeping your purchasing power equal. Performance raises should be added on top of the COLA to increase your real wealth.
COLA
Cost-of-Living Adjustment: a salary bump matching inflation to protect buying power.
Nominal Pay
The face value of cash compensation, unadjusted for inflation.
Bracket Creep
The tax effect of inflation pushing gross wages into higher tax tiers.