How this calculator works
A cost of living raise is the raise that keeps your pay buying what it bought last year: your pay × the inflation rate. Enter your pay, the raise you got and the inflation rate (the latest CPI is filled in) to see the raise you needed, how far above or below it you are per year, month and paycheck, and your real raise after inflation.
- Cost of living raise = current yearly pay × inflation % ÷ 100.
- Ahead or short = your raise in dollars − the cost of living raise. Per month ÷ 12, per biweekly paycheck ÷ 26.
- Real raise = (1 + raise %) ÷ (1 + inflation %) − 1. Hourly pay is converted at hours per week × 52.
Worked example
With these inputs: current pay $55,000; paid per Year; hours per week 40; raise you got or were offered 4%; inflation over the year 3.4%; tax rate on the extra pay 30%.
The result is real raise after 3.4% inflation +0.58%, with your raise 4.00% · $2,200.00 a year and cost of living raise to keep up with 3.4% $1,870.00 a year · $155.83 a month. The tax rate is a rough marginal rate (federal bracket + 7.65% Social Security and Medicare + any state tax). Inflation is an average: if your own bills rose faster, use that figure instead.
What counts as a cost of living raise?
A cost of living adjustment (COLA) is a raise that matches inflation instead of rewarding performance. Social Security's COLA for 2026 was 2.8%; the consumer price index then rose 3.4% over the year to August 2026. In the table, a 2.8% raise on $55,000 leaves you $27.50 a month behind 3.4% inflation, while 5% puts you $73.33 a month ahead.
The BLS Employment Cost Index shows wages and salaries for civilian workers rose 3.2% over the 12 months to June 2026, a little under inflation, so an average raise this year barely kept pace.
Use your own bills as the inflation rate
The CPI is an average basket. If your rent, insurance or utilities went up faster, your personal inflation is higher. Add up last year's and this year's bills with the bill increase calculator or the rent increase calculator, and enter that percentage instead to see whether your raise covers your actual bills.
Then plan where the raise goes before the first bigger paycheck arrives: the paycheck budget calculator splits bills across paydays and the 50/30/20 budget calculator rebalances your categories at the new pay. For new salary, hourly and take-home figures from a raise, Monthly Income Booster's pay raise calculator covers that side.
Sources
Frequently asked questions
How do I calculate a cost of living raise?
Multiply your yearly pay by the inflation rate. With 3.4% inflation, a $55,000 salary needs a $1,870.00 raise ($155.83 a month) to keep the same buying power.
Is a 4% raise good in 2026?
It beats inflation: prices rose 3.4% over the year to August 2026, so 4% is a real raise of 0.58%, about $27.50 a month ahead on $55,000. It's also above the 3.2% rise in wages and salaries the BLS reported for the year to June 2026.
What is a real raise?
Your raise after inflation: (1 + raise) ÷ (1 + inflation) − 1. A 4% raise with 3.4% inflation is a 0.58% real raise; a 2% raise is a 1.35% pay cut in real terms.
What was the 2026 Social Security COLA?
2.8%, announced by the Social Security Administration for benefits paid from January 2026.
Should I ask for a cost of living raise?
If your raise is below inflation, the numbers here are a fair, factual way to ask: what you needed to keep pace, what you got and the gap per month. Bring your own bill increases if they ran above the CPI.