Annual Raise Projection

An annual raise projection is a forecast of your future salary and earnings based on an expected annual percentage increase. It helps you visualize your potential income growth over several years, factoring in compounding raises, one-off promotions, and the eroding effect of inflation on your purchasing power.

The projection is calculated year by year. It starts with your current salary and applies the annual raise percentage to get the next year's salary. This new salary then becomes the base for the following year's raise, creating a compounding effect. The 'real value' of your salary is also calculated by discounting the future salary by the expected inflation rate, showing what your money would be worth in today's dollars.

• An annual raise that matches inflation is effectively a pay freeze. To genuinely increase your wealth and purchasing power, your raise needs to be higher than the Consumer Price Index (CPI).
• Salary growth is not always linear. The biggest jumps often come from changing jobs or securing a significant promotion, which can be far more impactful than a standard annual 3-4% raise.
• Many Australian employment awards and enterprise agreements mandate a minimum annual wage increase. Check your award to see if you are entitled to a specific percentage increase each year.

• Use this projection to set financial goals. Knowing your potential future income can help you plan for major purchases like a house deposit or for retirement.
• Benchmark your salary against industry standards using reports from sources like Hays, Seek, or Robert Walters. If your projected salary is falling behind the market rate, it's a strong indicator you need to negotiate a larger raise or look for a new role.
• Prepare for your annual performance review by documenting your achievements. Quantify your successes and link them to the company's goals to build a strong case for a raise that's above the standard rate.