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Future Value Formula:
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The Future Value (FV) of salary calculates how much your current salary will be worth in the future, accounting for annual raises or cost-of-living adjustments. It helps in financial planning and understanding the long-term value of your earnings.
The calculator uses the Future Value formula:
Where:
Explanation: The formula accounts for compound growth of your salary over time, showing what your salary would be after regular annual increases.
Details: Calculating future salary helps with career planning, retirement planning, and understanding the long-term impact of raises. It's essential for negotiating salaries and making career decisions.
Tips: Enter your current salary in dollars, expected annual raise rate as a decimal (e.g., 0.03 for 3%), and number of years to project. All values must be valid (salary > 0, rate ≥ 0, years ≥ 1).
Q1: How accurate is this calculation?
A: It provides a mathematical projection assuming constant annual raises. Actual salary growth may vary based on career progression, job changes, and economic conditions.
Q2: Should I include bonuses in PV?
A: For base salary projections, use your fixed salary. For total compensation projections, you could use your total expected annual compensation.
Q3: What's a typical annual raise rate?
A: This varies by industry and economy, but 2-5% is common for cost-of-living adjustments, with higher rates for promotions.
Q4: Can I calculate monthly instead of annual?
A: For monthly calculations, adjust the rate to monthly (divide annual rate by 12) and use months instead of years.
Q5: How does this relate to inflation?
A: The calculation shows nominal future value. For real (inflation-adjusted) value, subtract expected inflation from your raise rate.