Cost of Living Raise Calculator
Work out whether a pay rise actually keeps up with inflation, or whether it is a real-terms pay cut wearing a friendly number. Enter your current pay, the raise on offer, and the inflation rate over the same period.
Worked example
| Measure | Value |
|---|---|
| Current salary | $60,000 |
| Raise offered | 3.0% ($1,800) |
| New salary | $61,800 |
| Inflation over the same period | 3.4% |
| Salary needed just to break even | $62,040 |
| Real-terms change | −0.4% (about $240 short) |
What counts as a good raise
A raise equal to inflation holds you level. A raise above inflation is a genuine increase in living standards. A raise below inflation means you can buy less than you could a year ago, regardless of how the offer is framed. When negotiating, the relevant comparison is not last year's salary but last year's salary adjusted for price changes.
Social Security COLA
Social Security benefits are adjusted annually using the CPI-W index, measured over the third quarter compared with the same quarter a year earlier. This is why the announced COLA often differs from the headline CPI figure quoted in the news, which uses CPI-U over a different window.
Frequently asked questions
Is a cost of living adjustment the same as a merit raise?
No. A cost of living adjustment is meant only to preserve purchasing power. A merit raise is additional, reflecting performance or a change in role. Employers sometimes present one as the other.
Which inflation figure should I use?
For most purposes the 12-month headline CPI covering the same period as the raise. For Social Security specifically, CPI-W is the governing index.