What raise should I ask for to keep up?

How to Determine the Raise You Should Ask For to Keep Up

In today's ever-evolving economic landscape, understanding what raise to ask for is crucial to maintaining your purchasing power💡 Definition:The value of a currency expressed in terms of the amount of goods or services that one unit of money can buy.. As inflation fluctuates and wage growth varies, it's important to stay informed and strategic about salary negotiations. This article will💡 Definition:A will is a legal document that specifies how your assets should be distributed after your death, ensuring your wishes are honored. guide you through determining an appropriate raise that keeps pace with inflation and enhances your financial well-being.

Understanding Inflation and Wage Growth

Before diving into what raise to request, it's essential to grasp the current economic context. As of 2025, inflation (measured by the Consumer Price Index💡 Definition:A government measure of inflation that tracks the average change in prices consumers pay for goods and services over time.) stands at around 2.7%. Meanwhile, average salary increases in the U.S. are projected to be between 3.7% and 3.9%, according to reports from WTW and The Conference Board.

Interestingly, wage growth has been outpacing inflation since mid-2024, with annual wage growth at about 4.2%, according to the Atlanta Fed Wage Tracker. This means real wages have increased by approximately 0.8% over the past year, providing a slight boost to purchasing power for many workers.

How Much Should You Ask For?

When it comes to requesting a raise, consider the following approaches:

• Match Inflation: At a minimum, your raise should match the annual inflation rate💡 Definition:General increase in prices over time, reducing the purchasing power of your money. of 2.7% to maintain your current standard of living.
• Exceed Inflation: To achieve real wage growth, consider asking for a raise that exceeds inflation. A 3.5% to 4.5% raise aligns with typical increases in 2025 and ensures you gain purchasing power.
• Benchmark Against Peers: Utilize industry or regional salary surveys to determine what similar roles are paying. This data can provide leverage💡 Definition:Leverage amplifies your investment potential by using borrowed funds, enhancing returns on your own capital. in negotiations.
• Leverage Personal Performance: Highlight your contributions, skills, and any increased responsibilities to justify a higher raise.

Practical Examples

Let's say your current salary is $60,000. Here's how different raise scenarios would play out:

• Matching Inflation (2.7%):

  • New Salary: $61,620
  • Raise Amount: $1,620
  • Outcome: Maintains purchasing power.

• Typical 2025 Increase (3.5%):

  • New Salary: $62,100
  • Raise Amount: $2,100
  • Outcome: Modest real wage growth.

• Above Average Increase (4.5%):

  • New Salary: $62,700
  • Raise Amount: $2,700
  • Outcome: Significant real wage growth, improving financial security💡 Definition:Collateral is an asset pledged as security for a loan, reducing lender risk and enabling easier borrowing..

If your salary hasn't increased since 2021, you would need a 22.7% raise to fully restore your purchasing power. However, such a large increase is rare and may require a strategic career move or role change.

Common Mistakes and Considerations

When negotiating raises, avoid these pitfalls:

• Ignoring Market Trends: Stay informed about average wage growth and inflation rates to ensure your request is reasonable.
• Underestimating Your Worth: Use data to back up your request. Highlight how your role has evolved or how your skills have advanced.
• Focusing Solely on Base Salary: Consider total compensation, including bonuses, benefits, and other perks. However, prioritize base salary increases for long-term sustainability.

Bottom Line

The key to a successful raise negotiation is preparation and understanding the economic backdrop. Aim to at least match inflation with your raise request, but don't hesitate to ask for more if your performance and market data support it. Wage growth projections for 2025 suggest that a 3.5% to 4.5% raise is reasonable and competitive.

By being informed and strategic, you can ensure your salary keeps pace with or outpaces inflation, enhancing your financial stability and buying power.