How much is a small raise really worth?
A $5K raise compounds three ways: future raises stack on the higher base, retirement contributions scale with income, and the gap invests every year. Run all three over a 30-year career.
How the math works
A raise compounds three different ways at once. The calculator runs all three:
- Salary base growth: next year's percentage raise applies to a higher base.
salaryn = salary0 × (1+g)n - Cumulative earnings difference: sum of (with-raise − without-raise) across all years. This is the raw paycheck advantage.
- Investment growth: the after-tax difference invested at expected return.
FV = Σ Δn(1+r)N−n
Default growth: 3% annual raise (long-run US wage growth). Default return: 7% (real S&P 500 average). Default tax: 30% effective. All three are sliders, because raise rates vary widely by industry and seniority — software in your 20s might run 8-12%, a stable government role 1-2%.
Math runs locally. Inputs never leave your browser. Source on github.
Scenarios we've already crunched
If your situation matches one of these, the article shows the math worked through:
- $5K raise at 30 → $800K career advantage by 65 — full breakdown of the three compounding effects, plus what catching up later costs.
- Why a $5K raise isn't $5K — the three compounding mechanisms (raise base, retirement match, investable surplus) and how they stack.
- Starting salary matters more than the next 10 raises combined — first negotiation is the highest-leverage one because it's the base every subsequent raise multiplies.
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$5K Raise at 30 = $800K by 65 (the Math, Three Different Ways)
Two friends, same offer, $5K negotiation gap. Over 35 years and 3% annual raises that gap becomes $699K of paycheck difference. Add the invested surplus and it's $800K+. Here's all three compounding effects, with the assumptions made explicit.
A $5K Raise Isn't $5K: the Three Compounding Layers
A $5K raise is three things at once: a higher base for future raises, a bigger 401(k) match, and a permanent investable surplus. Each layer compounds independently, and they stack.
Why Your First Salary Negotiation Outweighs Every Later One
First salary becomes the base every percentage raise multiplies. We ran the same $5K negotiation at ages 25, 35, and 45 — the 25-year-old gets 8× the lifetime impact for the same conversation.