How this instrument works
A future salary projection answers one narrow question: if a raise of the same percentage lands every year, what does the paycheck look like after a given stretch of years? The formula is shaped exactly like compound interest because the mechanics are identical — each year's raise is a percentage of last year's already-larger salary, not of the original figure, so the dollar size of the raise itself grows every year even while the percentage stays fixed. On the default sheet here, a $70,000 salary with 3% annual raises reaches $94,074.15 after 10 years, and the gap between that figure and a naive flat-dollar guess is the entire reason this compounds rather than adds.
Job candidates comparing two offers with different raise schedules use this calculation to see past year-one pay into what five or ten years of a stated raise policy actually implies. Employees deciding whether to stay somewhere with modest, near-guaranteed increases or leave for a role with no stated schedule run the same math to price the trade. HR and compensation teams use it in reverse, checking whether a proposed multi-year raise structure keeps pace with turnover risk or peer offers. The recurring mistake across all three: treating a small annual percentage as small in absolute terms indefinitely, when compounding means its dollar contribution keeps climbing even at an unchanged rate.
This instrument holds the raise rate perfectly constant, which no real career does — promotions land as step jumps, some years bring no raise at all, and job changes reset the baseline entirely. It also works in nominal dollars only, so inflation, taxes, and benefits are left out on purpose; a raise rate that merely tracks inflation leaves real buying power flat even as this projection climbs. That is a different question from what the lifetime-earnings calculator on this site answers, since that instrument multiplies one flat salary by years worked with no growth assumed at all, and a different question from CAGR, which works backward from a known start and end value rather than projecting one forward from an assumed rate.
- Enter Current salary, $ — the starting figure the projection compounds from.
- Set Expected annual raise, % to the steady yearly increase you want modeled, entered as a whole percent.
- Choose Years from now for how far out the projection should run.
- Read Projected salary — the compounded result after that many years of the stated raise.
- Change the raise rate alone to see how much a single extra percentage point moves a long-horizon figure.
Worked example — $70,000 at a steady 3% raise
Take the default sheet: Current salary, $ set to 70000, Expected annual raise, % set to 3, and Years from now set to 10. The formula raises 1.03 to the 10th power, a growth factor of roughly 1.343916, and multiplies that by 70000 to give a Projected salary of $94,074.15 — the exact figure this instrument returns for those three inputs.
Compare that against a flat-dollar assumption instead: 3% of the original $70,000 is $2,100, and ten flat raises of $2,100 would land at $91,000, which is $3,074.15 short of the compounding answer. The difference exists because each real raise here is 3% of an already-larger salary — by year ten it is 3% of roughly $91,335, not 3% of $70,000 — and that widening base is exactly what a percentage raise, as opposed to a fixed dollar raise, means over a long enough span.
Questions
Why does a steady 3% raise compound like interest?
Because each raise is calculated on last year's salary, not the original figure, exactly the way compound interest grows a savings balance. A steady 3% raise on $70,000 adds $2,100 in year one, but by year ten it is adding 3% of a salary that has already grown past $91,000, so the dollar amount of the raise itself keeps rising even though the percentage never changes.
How is this different from the lifetime earnings calculator?
Lifetime earnings multiplies one flat salary by years worked and deliberately assumes no raises at all, answering how large a career total looks at a constant rate. This instrument does the opposite: it ignores total career pay and instead compounds a single salary forward year by year, answering what one future paycheck looks like rather than what a whole career sums to.
Can this handle a raise rate that changes year to year?
Not directly — the formula assumes the exact same percentage every year across the whole span entered in Years from now. Real pay moves in uneven jumps: a promotion year, a flat year, a cost-of-living adjustment. Approximate an uneven path by running this calculator once per stretch of steady raises and feeding each result back in as the next stretch's Current salary.
Why does the projected figure look inflated next to my real buying power?
Because nothing here subtracts inflation — this formula tracks nominal dollars, the number printed on a paycheck, not what those dollars purchase once prices rise over the same years. A raise rate that only matches inflation keeps real purchasing power flat even as the projected total climbs, so compare your entered rate against actual inflation data before treating the growth here as a gain.
What raise rate should I actually enter?
That depends on the situation being modeled, and this instrument only performs the arithmetic — it does not recommend a figure. Recent US employment-cost survey data has clustered typical annual increases in the low single digits, well below what a promotion or a job change can add in one step, so a rate borrowed from broad survey averages is a starting point, not a guarantee for any one career.
References
- U.S. Bureau of Labor Statistics — Employment Cost Index (wages and salaries)
- U.S. Bureau of Labor Statistics — Consumer Price Index overview
- Social Security Administration — National Average Wage Index
Read this first: This instrument shows arithmetic, not advice. Real offers add fees, taxes and terms that vary by lender and place — verify the figures against your actual paperwork before deciding anything.