1. What is 3% Annual Salary Increase?

A 3% annual salary increase is a common cost-of-living adjustment (COLA) in California and many other regions. It accounts for inflation and maintains purchasing power over time.

2. How Does the Calculator Work?

The calculator uses the compound interest formula:

Where:

• Old Salary — Current salary amount in USD
• Years — Number of years for projection
• 3% — Annual increase rate (0.03 in decimal)

Explanation: Each year's salary becomes the base for the next year's 3% increase, resulting in compound growth.

3. Importance of Salary Projection

Details: Projecting salary growth helps with financial planning, budgeting, and understanding long-term earning potential in California's economy.

4. Using the Calculator

Tips: Enter current salary in USD and number of years for projection. Both values must be valid (salary > 0, years ≥ 0).

5. Frequently Asked Questions (FAQ)

Q1: Is 3% the standard annual increase in California?
A: While common, actual increases vary by employer, industry, and individual performance. 3% is a typical cost-of-living adjustment.

Q2: How does this compare to inflation?
A: 3% generally matches or slightly exceeds average inflation, maintaining purchasing power.

Q3: Are raises typically compounded annually?
A: Yes, most raises are calculated as a percentage of current salary, resulting in compounding.

Q4: What if I get different raise percentages each year?
A: This calculator assumes consistent 3% increases. For variable rates, you'd need a more complex calculation.

Q5: Does this account for promotions or job changes?
A: No, this only calculates cost-of-living adjustments. Promotions typically involve larger salary increases.