If your total compensation doesn’t increase by at least 3.5% you are not even breaking even. And you need even more than that to make up for the zero raises of 2026.
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@ea Yes. The point is, if you get a 2% raise on a 200k salary ($4k) and your variable expenses do not increase by at least $4k a year, you can still be ahead of inflation even though your raise is technically lower than COLA %. This isn’t the case for everyone, but the blanket statement that your raise must beat inflation rate to be ahead is not true. Truly depends on what costs are actually inflating.
Just because the mortgage itself doesn’t change doesn’t mean your monthly payments can’t go up. For example, rising property taxes and home insurance are increasing total ownership costs, causing unusually high foreclosures in Florida..
Completely incorrect.
The true impact of inflation on your finances is not simply a direct comparison between the inflation rate and your salary increase. What really matters is how much of your income you actually spend on the things that are getting more expensive.
If a large portion of your expenses are fixed, like a mortgage that does not change, then only part of your budget is affected by inflation. Because of that, even if your raise is lower than the headline inflation rate, you may still come out ahead if your actual spending does not rise by the same amount.
In other words, if your fixed expenses stay stable and you avoid increasing your lifestyle as your income grows, a smaller raise can still leave you better off in real terms.