Cost of Living Adjustment Calculator

Calculate the salary needed to maintain purchasing power after relocation or inflation.

About Cost of Living Adjustment Calculator

Location and inflation adjustments compound rather than add, so both must be applied multiplicatively. An offer that appears to be a rise can represent a real cut once both are accounted for. Nominal rises below inflation are real pay cuts, which is why the real change figure rather than the headline increase is the one that matters.

Formula

Cost of Living Adjustment

Required salary = current × (new index ÷ current index) × (1 + inflation)

cost index: Relative cost of a standard basket between locations
real change: Change in purchasing power after both adjustments

Worked example

With the default values below, Cost of Living Adjustment Calculator returns Salary Needed to Maintain Purchasing Power of $63,937.12. Change any input above and every figure here is recalculated in your browser.

Inputs used

Current salaryminimum 0: 52,000
Current location cost indexminimum 1: 100
New location cost indexminimum 1: 118
Inflation since the last riseaccepts -10–50 %: 4.2 %
Salary offeredminimum 0: 58,000

Results

Salary Needed to Maintain Purchasing Power: $63,937.12
Adjustment for Location: $9,360.00
Adjustment for Inflation: $2,577.12
Shortfall in the Offer: $5,937.12
Real Change in Purchasing Power: -9.29%

Step by step

1Values used
2Cost of Living Adjustment
3Salary Needed to Maintain Purchasing Power= 63,937.12
4Adjustment for Location= 9,360.00
5Adjustment for Inflation= 2,577.12
6Shortfall in the Offer= 5,937.12
7Real Change in Purchasing Power= -9.29

Assumptions and limits

The result is derived only from the 5 inputs listed above. Anything not among them is not part of the calculation.
In particular, this calculator does not take tax or compounding frequency into account.
Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

How is Cost of Living Adjustment calculated?

Required salary = current × (new index ÷ current index) × (1 + inflation) Location and inflation adjustments compound rather than add, so both must be applied multiplicatively. An offer that appears to be a rise can represent a real cut once both are accounted for.

Why does Cost of Living Adjustment matter?

Nominal rises below inflation are real pay cuts, which is why the real change figure rather than the headline increase is the one that matters.

What values do I need to enter?

This calculator takes 5 inputs: Current salary, Current location cost index, New location cost index, Inflation since the last rise, Salary offered. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.