How do annual raises compound?

Each year's raise builds on the previous higher salary. A 4% raise for 5 years on $60,000 gives $73,000 (not $72,000 from simple addition).

How long until my salary doubles with annual raises?

Use the Rule of 72: divide 72 by your raise percentage. At 3%: ~24 years. At 5%: ~14 years. At 7%: ~10 years.

Annual Raise Calculator

Project how annual raises compound your salary over time. See year-by-year growth, inflation-adjusted values, and the long-term difference between different raise rates.

Current Salary

Pay Period

Raise Type

Raise (%)

Inflation (%)

Tax Rate (%)

New Salary

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Annual Increase

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After-Tax Increase

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Real Raise (vs Inflation)

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Pay Period Breakdown

Period	Before	After	+/-

5-Year Projection

Year	Salary	Gain

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📋 Calculation History

Previous calculations saved locally in your browser.

How Annual Raises Compound

Annual raises don't just add up — they compound. Each year's raise is applied to the previous year's higher salary. A consistent 4% annual raise turns $60,000 into $73,000 after 5 years, not $72,000 (simple addition). That extra $1,000 is pure compounding.

Annual Raise Compounding Examples

Starting Salary	After 5 Years (3%)	After 5 Years (5%)	After 10 Years (5%)
$50,000	$57,964	$63,814	$81,445
$70,000	$81,149	$89,340	$114,022
$90,000	$104,335	$114,866	$146,600
$120,000	$139,113	$153,154	$195,467

When Do Annual Raises Typically Happen?

Most companies review compensation annually during performance review cycles (January or April are common). Some offer mid-year adjustments for promotions or market corrections. Government employees often follow step-based annual increase schedules.

FAQ

What is the average annual raise?

The average annual raise across all industries is 3–4.5%. Technology and finance tend to be higher (4.5–6%), while education and government are lower (2–3.5%).

How much should my salary grow per year?

At minimum, your salary should grow at the rate of inflation (currently ~3%) to maintain purchasing power. Career growth should aim for 5–7% annually through merit raises, promotions, and job changes.

Is it better to get one big raise or small annual raises?

Due to compounding, consistent annual raises often outperform a single large raise over 5+ years. Use the scenario comparison above to model this for your specific situation.

Related Tools

Pay Raise Calculator — complete raise tool
Salary Raise Calculator — one-time salary increases
3% Raise Calculator — the standard annual increase