Merit Raise Plus COLA Calculator
Combine specified adjustment rules.
Merit Raise Plus COLA Calculator: Scenario Inputs
Annual percentage rate or benchmark index change.
Inflation & Purchasing Power Analysis
Over 3 years at 3.5% inflation, a $75,000 salary requires $83,154 to retain equal purchasing power. Without matching raises, your real compensation experiences an effective reduction of $7,355 (-9.81%).
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How Merit Raise Plus COLA Calculator Works?
The Merit Raise Plus COLA Calculator applies the cost-of-living adjustment first. It then applies the merit raise to the resulting pay, so the two increases compound.
Enter salary
Type current salary.
Enter the COLA
Type the COLA rate set for all staff.
Enter the merit raise
Type the merit rate from the performance rating.
Pick the method
Choose additive or compounded, and read the total raise and new salary.
Merit Raise Plus COLA Calculator Formula
The Merit Raise Plus COLA formula multiplies one plus the COLA by one plus the merit rate.
Total = (1 + COLA) × (1 + Merit) − 1
Total = COLA + Merit
Variables
- COLA
- Cost-of-living adjustment
- Merit
- Performance-based raise
Worked example
A 3% COLA plus a 3.5% merit raise gives a compounded total of 6.60%. A $70,000 salary rises to $74,624, $74 more than the additive method.
Merit Raise Plus COLA Calculator Conversion Table
This table combines a 3% COLA with 4 merit levels for a $70,000 salary.
| Rating | Merit raise | Total raise (compounded) | New salary | Real gain at 3% inflation |
|---|---|---|---|---|
| Below expectations | 0.0% | 3.00% | $72,100 | +0.00% |
| Meets expectations | 2.0% | 5.06% | $73,542 | +2.00% |
| Exceeds expectations | 3.5% | 6.60% | $74,624 | +3.50% |
| Outstanding | 5.0% | 8.15% | $75,705 | +5.00% |
What is Merit Raise Plus COLA Calculator?
The Merit Raise Plus COLA Calculator is a tool that combines a cost-of-living adjustment (COLA) with a performance-based merit raise and shows the total raise and the real merit gain. The COLA protects purchasing power, and the merit raise rewards performance.
The calculator supports 2 methods: adding the 2 rates, or compounding them by applying merit on top of the COLA-adjusted salary.
What are the uses of Merit Raise Plus COLA Calculator?
There are 4 main uses of the Merit Raise Plus COLA Calculator.
Build merit matrices
Set total raises by rating on top of a COLA.
Explain raise letters
Show staff which part of a raise is COLA and which is merit.
Budget merit pools
Cost COLA and merit budgets together.
Protect low raters
Confirm every rating keeps purchasing power through the COLA.
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