Raise Compounding Calculator
Compare consistent annual raises against a one-time salary jump to see which grows your income more over time.
A smaller raise applied and compounded every year
A bigger raise once (e.g. new job or promotion), no further raises
How Compounding Works
A raise applied every year compounds, meaning each year's increase is based on the previous year's salary, not the original starting number. Over time, this can add up to more than a single larger raise that never repeats.
Year N Salary = Starting Salary × (1 + Raise %)^NExample Calculation
Starting at $60,000, a 3% annual raise every year versus a single 15% jump with no further raises:
Year 5 (3% annual) = $60,000 × 1.03⁵ ≈ $69,556
Year 5 (one-time 15%) = $60,000 × 1.15 = $69,000By year 5, the compounding raises slightly overtake the one-time jump, and the gap continues to widen the longer the time period extends.
Frequently Asked Questions
Is it better to get small raises every year or one big raise?
It depends on the time horizon and the size of each option. Small annual raises compound over time and can eventually overtake a one-time jump, especially over longer periods, while a one-time jump provides more value immediately.
How does salary compounding work?
Each year's raise is calculated as a percentage of the previous year's salary, not the original starting salary, so the dollar value of each raise grows over time.