Does anyone get annual raises in excess of the rate of inflation?

[Captain Cactus]

Ever since I started working… from the Army to the private sector… my annual “raises” are essentially cost of living adjustments… 2% to 3% “raises”.  The only time I got a real raise was by moving into a new job.

Is this normal?  Do people in the private sector get annual raises in excess of the rate of inflation?

[PDXTabs]

I have at times. In particular the first three years out of college I did (not immediately, all at once after three years).

My current place of employment used to give me above inflation raises until inflation was at its current rate. Now I get less than inflationary raises, apparently.

[mistymoney]

my last company we went 5 years with no raises....it was terrible.

[volleyballer]

My last company, no. I would get 1 to 2 %, and the company would tell everyone it was because they didn't meet their profit targets or some bs like that (even though profits were great, I knew because I owned stock). The kicker too, was that they would raise my billable rate each year by like 5% or more... Usually double or triple the % that I got for a raise.

My current company, over the last two and a half years, gave me over 3% annual raise, plus two unsolicited out of cycle raises of 10% and 2%.

[AccidentialMustache]

Yes but rarely. I suspect in most cases I've seen them it has been I was hired as an unknown lower on the salary scale than I'm worth, and the raises are that being fixed.

The better raises though, tend to be promotion or job hopping.

[gooki]

Ever since I started working… from the Army to the private sector… my annual “raises” are essentially cost of living adjustments… 2% to 3% “raises”.  The only time I got a real raise was by moving into a new job.

Is this normal?  Do people in the private sector get annual raises in excess of the rate of inflation?

This is pretty normal in big companies. Your manager is given a 2% budget increase, and the fairest way they see is to distribute it evenly among the team. For them to give someone a 10% raise, 4 people would have to get a 0% raise. Seldom is that option best for team dynamics, unless you have 4 staff members you want to nudge out the door.

Once I figured out that no matter how hard one worked the best you'd get would be inflation adjustment raise, I just started asking for significantly higher salaries when job hopping to make up for the minimal pay rises. This worked well and helped me give less fucks about my job. Do it good, go home and don't stress trying to be a top performer because there will be no additional reward.

Early on in my career I had a few 10% raises. But that soon stopped once my salary matched my older peers.

[Dave1442397]

My company is known for crappy raises, like 1-2%. However, you have to look at the big picture. I knew my salary was on the high end of the range for my position when I started there, so the smaller raises weren't a big deal. Also, I get a bonus of around 3% every year, they have a 7% 401(k) match, and I rarely work overtime.

I have friends in management positions who seem to work 80 hours a week. I doubt they make twice my salary, so what do they make on an hourly basis? That's something I've always considered when thinking about my job.

[wageslave23]

I used to get 10% raises by demanding them and or job hopping.  Now that I'm closer to FIRE, I've lost my motivation to switch jobs or threaten to switch jobs which is usually the only way you get big raises. Or promotions but I've lost motivation for that either. Once you get up to a certain level of income it's hard to be motivated by 10-20% pay increase. Marginal utility and all.

[bryan995]

We would normally get a 2-3.5% yearly COL adjustment. The exact % was based on performance. Most people got ~2.75%. This year, during inflation, that adjustment was set at 7%.

The time to get the largest percent raises are either during promotions or when you switch companies. A promotion raise is normally 10-15%, and can generally happen every 1-1.5 years. However when you switch companies, you could be looking at 20-40% (because often salary at one single company over time lags far behind market rate).

I generally stay put for 3-4 years. Work hard so that promotions and raises and stock awards are accelerated. Get that final promotion, and then leave, to reset compensation. No sense to log time/experience at that new level at the company you intend to leave :?

Will repeat this cycle ~3 times before I FIRE :)

[cool7hand]

Former private sector employment law professional here. Please don't think I'm saying that the below incentives are optimized for all parties. Quite the contrary, I suspect that the current incentives are at best short sighted.

This is what I observed over 20 plus years. For those without the negotiating leverage to influence their own salary, it is extremely rare in the private sector for raises to be tied to the employees' economic reality. The better heuristic in the private sector is to identify a percentage raise that is just enough to retain a sufficient amount of the organization's workforce, so that the organization isn't shooting itself in the foot by creating a turnover rate that's a drag on profits. In other words, pay as little as you can given the supply and demand for the workers the organization needs given the current market for those workers.

[bmjohnson35]

Former private sector employment law professional here. Please don't think I'm saying that the below incentives are optimized for all parties. Quite the contrary, I suspect that the current incentives are at best short sighted.

This is what I observed over 20 plus years. For those without the negotiating leverage to influence their own salary, it is extremely rare in the private sector for raises to be tied to the employees' economic reality. The better heuristic in the private sector is to identify a percentage raise that is just enough to retain a sufficient amount of the organization's workforce, so that the organization isn't shooting itself in the foot by creating a turnover rate that's a drag on profits. In other words, pay as little as you can given the supply and demand for the workers the organization needs given the current market for those workers.

This was my experience with my former employer.  I only received raises above inflation when promoted.

[jrhampt]

I have typically gotten 4-5% annual raises with my company since I am considered a high performer, and since inflation has been low, they have exceeded inflation.  This year I got a promotion with a 10% raise because I asked for it, but otherwise my annual raise was less than inflation for the first time in a while, at 3.5%.  This is the only company I have been at that gave consistently good raises and bonuses for good work, plus excellent PTO.  I've been here for 10 years total but in between I left for a few years for another company (to get salary bump in part), and the other company had a good ESPP (stock purchase plan) but gave poor raises at around 2%.  So I came back.

The way to max your market rate is to occasionally threaten to leave and get a counteroffer at your current company, request promotions, or shop around and actually leave every few years.  If you don't actively manage your pay in some way you will fall behind.  It's a pain but I'm probably making at least $50-60k above what I would be otherwise.  You do lose the motivation to do this as you get older and richer.  I have probably maxed out at my current org (Fortune 100 company - I would get considerably less $ at a smaller company) as an individual contributor, so unless I want to acquire direct reports, I would have to transfer my skillset to a different industry or a FAANG if I wanted to dramatically increase my salary.

[MayDay]

~3% every year. Often inflation is below 3% but it burns this year for sure. Bigger increases are pretty much promotion only, or maybe bringing a counteroffer.

[shureShote]

Megacorp here. They tried to stem the outflow last November with an out of cycle 8% increase for every employee. It was weird (though appreciated…). Other than that it’s been 1.5-2.5% each year for the last decade. It’s fine for me, I am now 100% remote and only have a few more years.

[Arbitrage]

Our company-wide "merit increase" pool has averaged close to the inflation rate during my nearly two decades working there.  3 years with zero raise pool.  For a number of years, they tried to pull the wool over people's eyes by having a slightly higher headline number for the compensation package, but the fine print noted that half of the headline number was just a single-year bonus, so the real raise pool was half of what was advertised.

Personally, I did a fair amount better than inflation, but only once I left my initial gig and started taking on jobs that would push my boundaries a lot more.  I became a high performer (really wasn't in my first assignment) and raises eventually reflected that, though most of my outpacing of inflation came from promotions and special midyear raises. 

With the current spike in inflation, the company hasn't changed anything, with a raise pool under 3%.  At the same time, they complain that they can't retain people or hire enough to meet their hiring targets.  To be fair, the timing of the raise pool determination was pretty early on in the spike, so we'll have to see if there is any adjustment for next fiscal year.  Personally, I doubt it, and suspect that we'll just keep losing to inflation.  It would bother me more, but now I'm coast-FI.

[ChickenStash]

Depends on the company. I've worked at some that were well below inflation (one of the reasons I quit them) and some that were a bit above. My current company has been giving raises averaging well above inflation to keep from bleeding talent in the current market.

Unfortunately, though, they haven't been consistently rewriting the pay ranges for all the job roles so some folks (like me) wound up above the range and aren't raise eligible. It's tough to get sympathy from the ones in charge. They don't seem to understand that the primary reason folks are above the range is that HR has done a terrible job keeping up with the local market wages for the last decade or so.

[patchyfacialhair]

Been with my company 10 years. Always seemed to get 2-3% despite being a top performer on paper. Since COVID I have really checked out and slacked off, and am barely "meeting expectations" on my performance evals for the last 2 years, and still, I'm getting 2-3%.

I'm taking coursework to change careers and that has a lot more potential for income boosting if I can make it happen.

[secondcor521]

At both large tech companies where I worked (about 16 years as an engineer and then about 5 years as a first level manager), the process was essentially the same.

The company would first go to a third party which would collect compensation information from a lot of tech companies.  The company would provide it's compensation information for various job titles (Engineering technician, Engineer I, Engineer II, Project Manager I, etc.), and would also pay for the aggregated and anonymized data.

The company could then, in theory, decide on their overall compensation strategy.  At both companies, the strategy seemed to be to pay about average, get about average, but assert that their employees were the best.  So if the average compensation went up by 5% in the survey, they would allocate 5% of total wages to their raise pool.

That 5% total was allocated differently, though, depending on rated performance and managerial discretion (the latter especially in terms of equity compensation and borderline cases).  Typically the top "cream of the crop" employees were given outsized raises - 12% to 20%, the latter usually if a person's performance was unusually high relative to their current salary.  The next level - the well above average but not superstar - would be perhaps 7% to 11%.  The average would get inflation-level raises, so 4% to 6%.  Below average would get 0% and encouraged to try harder, or be in the process of being managed out of the company.

So you can actually reverse engineer what the company (and somewhat your immediate manager) thinks of you by looking at your raises and compare them with the overall raise pool (if you know it) or wage inflation generally (as a generally decent proxy).  If you're not getting raises or your raises are below average, then you're a below average employee or are working for a company that is struggling economically (like a newspaper company in the last decade).  About inflation?  You're in the wide middle average.  Well above average?  You're above average and the company wants you to stay.  Amazingly generous?  You're top of the pile and/or somehow were underpaid when you first started.

Another tell is equity compensation.  Stock options, RSUs, and the like were typically only given to managers and the top two tiers of employee performers.  A great amount went to managers, a large chunk went to the cream of the crop, and a decent to modest chunk to the above average folks.  Average and below got zero equity compensation at both places (above and beyond token amounts like "every employee is being issued options for 50 shares").

[joe189man]

i have averaged 6.4% raises since mid 2017, low of ~4 and high of ~8% - i work at a smaller boutique engineering firm

[clarkfan1979]

i have averaged 6.4% raises since mid 2017, low of ~4 and high of ~8% - i work at a smaller boutique engineering firm

I am a college professor and it's pretty typically for our raises to not keep up with inflation. If inflation is averaging 3.5%, a typical raise is 2.5%.

[Captain Cactus]

Thanks all.  My original question came to mind after listening to the recent "Afford Anything" podcast with Paula Pant.  The guest on there was talking about investing at least 50% of of annual raises and being comfortable spending the other half.  But then he clarified that he only meant feeling comfortable spending the other 50% of the amount above the rate of inflation.  And that made me think... I only "earn" 2-3% annual "performance increase", which has been around the rate of inflation since I've been working (18 years).  Am I alone?  Do other people get higher raises, and are those people spending 50% of that amount above the rate of inflation on lifestyle inflation?

But alas... sounds like most people don't actually make more than inflation except by job hopping.  And once again... one of those podcast smartypantses has good ideas but is out of touch with reality. 

[wageslave23]

Thanks all.  My original question came to mind after listening to the recent "Afford Anything" podcast with Paula Pant.  The guest on there was talking about investing at least 50% of of annual raises and being comfortable spending the other half.  But then he clarified that he only meant feeling comfortable spending the other 50% of the amount above the rate of inflation.  And that made me think... I only "earn" 2-3% annual "performance increase", which has been around the rate of inflation since I've been working (18 years).  Am I alone?  Do other people get higher raises, and are those people spending 50% of that amount above the rate of inflation on lifestyle inflation?

But alas... sounds like most people don't actually make more than inflation except by job hopping.  And once again... one of those podcast smartypantses has good ideas but is out of touch with reality.

Yeah but you should be getting those raises when you job hop and you need to be job hopping.  Including job hopping my average raise has been 10% a year over the last 10 years

[scottish]

I had one in 2011.   But that was also a promotion.    I think there might have been one in 2008, but I can't remember.

All the other raises in excess of inflation were back when I was starting out and the experience increases were significant.

To further qualify, I've been at the top of my paygrade for about 9 years and I've declined to consider promotion to the next pay grade - because this would require travel, attending standards meeting, conferences and other activities for which I have a mild to intense dislike.

[cupcakery]

My lowest raise was 5%, my highest was 13%.  I work for a very small company, so raises are not on a set schedule and determined by the owner.

[NotBadForADad]

Both.

I worked a few years at a gig where my first year they gave me something like 20%, then next year they gave me another 8%. Essentially, the first raise was to get me to some sort of living wage as I was making $40k/annually.

I then took another job that offered me 22.5% increase, but then moved after a few months and took another job close to home but was about an 8% decrease.

Stayed at the job for 3 years just getting your standard ~3% increase. Finally started making the money I was before I took the job this year.

3 weeks ago, I then landed my current job that offered me about 16% more, and is 6 miles from home.

Essentially, it took me 6 years to double my salary and am currently back on the right trajectory for continued growth potential. 

[maizefolk]

I've averaged 7.5% annual wage growth since I started with my current employer eight years ago, but most of that has come from retention or promotion raises. Regular "merit" annual raises have been low (0-3%).

I am a college professor and it's pretty typically for our raises to not keep up with inflation. If inflation is averaging 3.5%, a typical raise is 2.5%.

Faculty salaries tend to be 90+% of departmental budgets. Tenure protects jobs, but not the purchasing power of salaries. If inflation stays elevated for a number of years things are going to get interesting for a lot of folks in our field.

[bryan995]

Ive been helping with hiring as of late. Generally in search of new PhD graduates. The salaries they demand and the competing offers we are seeing have increased > 30% since just the beginning of this year (150-170k base!)

Could be inflation. Could be an arms race to hire talent. Could be all of the above.

But for the average employee staying put (anywhere), they are now being severely underpaid.

Either push for huge promotions or switch jobs. It makes absolutely no sense to ever stay put somewhere >2-4 years unless you are a top 5% performer and are receiving constant compensation adjustments and promotions.

I’ve averaged probably close to 20% per year over 6 years, working in tech. 5 promotions. 2 companies.

[JLee]

Thanks all.  My original question came to mind after listening to the recent "Afford Anything" podcast with Paula Pant.  The guest on there was talking about investing at least 50% of of annual raises and being comfortable spending the other half.  But then he clarified that he only meant feeling comfortable spending the other 50% of the amount above the rate of inflation.  And that made me think... I only "earn" 2-3% annual "performance increase", which has been around the rate of inflation since I've been working (18 years).  Am I alone?  Do other people get higher raises, and are those people spending 50% of that amount above the rate of inflation on lifestyle inflation?

But alas... sounds like most people don't actually make more than inflation except by job hopping.  And once again... one of those podcast smartypantses has good ideas but is out of touch with reality.

Job hopping is basically mandatory IMO -- if you're fortunate enough to be in a company where you can get promoted, that helps (my first three years in tech showed ~22% / year with 5 promotions). I left for a ~60% raise, subsequently my next six years showed 4% a year with three different titles, but all effectively lateral. I left that place for 44%, so in ~9.5 years I'm at about 19.9% annual.  I was ready to leave a couple years ago but covid put a halt to that, figured staying somewhere reliable/safe was the prudent option.

[maizefolk]

Ive been helping with hiring as of late. Generally in search of new PhD graduates. The salaries they demand and the competing offers we are seeing have increased > 30% since just the beginning of this year (150-170k base!)

Could be inflation. Could be an arms race to hire talent. Could be all of the above.

But for the average employee staying put (anywhere), they are now being severely underpaid.

Plus one to this.

We have all sorts of positions we cannot fill (or even get applicants for). When we bring back data on just how much other organizations are paying for the same roles we're told that my org cannot pay that much because paying current market rate wages would new hire would be making dramatically more than the people who have been doing the same job for years. <-- gee, I wonder why so many of those people have been leaving for other opportunities then?

[Much Fishing to Do]

Thanks all.  My original question came to mind after listening to the recent "Afford Anything" podcast with Paula Pant.  The guest on there was talking about investing at least 50% of of annual raises and being comfortable spending the other half.  But then he clarified that he only meant feeling comfortable spending the other 50% of the amount above the rate of inflation.  And that made me think... I only "earn" 2-3% annual "performance increase", which has been around the rate of inflation since I've been working (18 years).  Am I alone?  Do other people get higher raises, and are those people spending 50% of that amount above the rate of inflation on lifestyle inflation?

But alas... sounds like most people don't actually make more than inflation except by job hopping.  And once again... one of those podcast smartypantses has good ideas but is out of touch with reality.

Job hopping is basically mandatory IMO -- if you're fortunate enough to be in a company where you can get promoted, that helps (my first three years in tech showed ~22% / year with 5 promotions). I left for a ~60% raise, subsequently my next six years showed 4% a year with three different titles, but all effectively lateral. I left that place for 44%, so in ~9.5 years I'm at about 19.9% annual.  I was ready to leave a couple years ago but covid put a halt to that, figured staying somewhere reliable/safe was the prudent option.

I have to admit I always wondered if you have to leave the job to get the salary increase or just have to ask (which you may have to read more reasonably as 'threaten to leave,).  I assume labor costs are the highest for a company, and in general companies would save a lot of money by not just giving away raises to everyone, as though that pay lag may cause some turnover there is such a tendency to just stay in your job for so many reasons companies know most will do that even if pay lags.  But in the end, for any individual who does threaten to leave, it seems to make sense to pay them if their performance has been any level average or above as opposed to then needing to replace.  Of course, maybe they fear giving in to the demand would lead to many others to make that demand so not go that route. 

No idea, but was always curious and I've got to think there are unwritten internal company policies/strategies around this at most.

[mtnrider]

Job hopping is basically mandatory IMO

Yes.  Salary compression is prevalent in software.  I'm on the other side, 10+ years in one place.  Fresh college grads make around what I do.  Many make more than I do, some twice as much.  This despite me getting the highest ratings, having domain knowledge, and having risen to what is an effectively terminal position for individual contributors.

I had personal reasons for not jumping, and my industry is well paid, which makes this easier to swallow.

Edit: I do get raises that, overall, keep up to or only narrowly miss inflation.

[JLee]

Thanks all.  My original question came to mind after listening to the recent "Afford Anything" podcast with Paula Pant.  The guest on there was talking about investing at least 50% of of annual raises and being comfortable spending the other half.  But then he clarified that he only meant feeling comfortable spending the other 50% of the amount above the rate of inflation.  And that made me think... I only "earn" 2-3% annual "performance increase", which has been around the rate of inflation since I've been working (18 years).  Am I alone?  Do other people get higher raises, and are those people spending 50% of that amount above the rate of inflation on lifestyle inflation?

But alas... sounds like most people don't actually make more than inflation except by job hopping.  And once again... one of those podcast smartypantses has good ideas but is out of touch with reality.

Job hopping is basically mandatory IMO -- if you're fortunate enough to be in a company where you can get promoted, that helps (my first three years in tech showed ~22% / year with 5 promotions). I left for a ~60% raise, subsequently my next six years showed 4% a year with three different titles, but all effectively lateral. I left that place for 44%, so in ~9.5 years I'm at about 19.9% annual.  I was ready to leave a couple years ago but covid put a halt to that, figured staying somewhere reliable/safe was the prudent option.

I have to admit I always wondered if you have to leave the job to get the salary increase or just have to ask (which you may have to read more reasonably as 'threaten to leave,).  I assume labor costs are the highest for a company, and in general companies would save a lot of money by not just giving away raises to everyone, as though that pay lag may cause some turnover there is such a tendency to just stay in your job for so many reasons companies know most will do that even if pay lags.  But in the end, for any individual who does threaten to leave, it seems to make sense to pay them if their performance has been any level average or above as opposed to then needing to replace.  Of course, maybe they fear giving in to the demand would lead to many others to make that demand so not go that route. 

No idea, but was always curious and I've got to think there are unwritten internal company policies/strategies around this at most.

I (and my manager) tried for 2-3 years to get me up to market rate at my last place but it wasn't happening.  I've been gone for 5 months and last I heard they started considering hiring two people to replace me. Turns out my skillset is not readily available or cheap...who knew!? ;)

[bryan995]

Job hopping is basically mandatory IMO

Yes.  Salary compression is prevalent in software.  I'm on the other side, 10+ years in one place.  Fresh college grads make around what I do.  Many make more than I do, some twice as much.  This despite me getting the highest ratings, having domain knowledge, and having risen to what is an effectively terminal position for individual contributors.

I had personal reasons for not jumping, and my industry is well paid, which makes this easier to swallow.

Edit: I do get raises that, overall, keep up to or only narrowly miss inflation.

I am curious ... why stay? Why not switch companies / departments etc?  A market adjustment would almost be guaranteed, no ?
Unless of course the workload continues to lessen / ease as salary stays constant?  That could be quite good !

My FIRE plans include basically working until to the rate at which my comp slows / stagnates.  Then I will retire.  Until then, I continue working and saving and investing.

[mtnrider]

I am curious ... why stay? Why not switch companies / departments etc?  A market adjustment would almost be guaranteed, no ?
Unless of course the workload continues to lessen / ease as salary stays constant?  That could be quite good !

Generally speaking, companies I've worked at don't change your salary for internal movement.  I have counseled others to switch companies.

Why did I not switch companies?  Switching involves cost.  I have family and roots in this area, so didn't want to move.  With the advent of remote work, I could switch more easily.  But now I'm just running out the FIRE clock and the stress in learning the ropes at a new company isn't worth the marginal dollars. 

It can be argued that I was naive to push hard while getting little financial recognition. 

My FIRE plans include basically working until to the rate at which my comp slows / stagnates.  Then I will retire.  Until then, I continue working and saving and investing.

Do you mean that you'll keep working until your compensation stagnates and then switch jobs?  Or are you already FIRE and are enjoying the salary increases to get a higher FIRE standard of living?

For that reason, I'm tempted to take some consulting gigs after FIRE if I want to raise my standard of living.

[bryan995]

I am curious ... why stay? Why not switch companies / departments etc?  A market adjustment would almost be guaranteed, no ?
Unless of course the workload continues to lessen / ease as salary stays constant?  That could be quite good !

Generally speaking, companies I've worked at don't change your salary for internal movement.  I have counseled others to switch companies.

Why did I not switch companies?  Switching involves cost.  I have family and roots in this area, so didn't want to move.  With the advent of remote work, I could switch more easily.  But now I'm just running out the FIRE clock and the stress in learning the ropes at a new company isn't worth the marginal dollars. 

It can be argued that I was naive to push hard while getting little financial recognition. 

Makes sense - at some point switching would also not be worth the hassle.  So in a way staying put is indeed making the job a bit easier (more familiar)!

My FIRE plans include basically working until to the rate at which my comp slows / stagnates.  Then I will retire.  Until then, I continue working and saving and investing.

Do you mean that you'll keep working until your compensation stagnates and then switch jobs?  Or are you already FIRE and are enjoying the salary increases to get a higher FIRE standard of living?

For that reason, I'm tempted to take some consulting gigs after FIRE if I want to raise my standard of living.

Both I suppose.  We could FIRE to some degree now, but would have to move and cut costs significantly (possible, but not preferred).   I also hope to consult post FIRE at my leisure.  I generally view available FIRE spend as a % of NW, standard of living + location + etc etc simply improve as NW increases. So then the longer we work, the higher FIRE standard of living we will have.  But even once we have "enough", I do still plan to work until my career peaks or I become so sick of it that I cannot continue on.  This seems to be the optimal exit point imo.   But I do know this is also not following MMM scripture - so I am careful to share such views :)

My wife and I both have advanced degrees, so it just seems so wasteful to stop working after only so many years.  Plus for now - I generally find working enjoyable, my wife ... not so much. Maybe she will FIRE first.  We also talked about a slow FIRE where one only one of us works, in two year increments.  Two on, Two off.  To keep insurance / 401k etc benefits running.  I

We also live in an extremely HCOL area, and have three kids in daycare at the sum of an absurd $4000/mo.  So FIRE + moving + ending dedicated childcare could cut our costs significantly.  Though now with home prices being so much higher, and having a <3% rate on a 30 yr fixed mortgage, I'm not so sure we would ever move.  We also benefit from CA prop13, so only pay taxes on 50% of our home value.  Which makes it seem borderline insane to ever sell/move at this point!

[mtnrider]

Both I suppose.  We could FIRE to some degree now, but would have to move and cut costs significantly (possible, but not preferred).   I also hope to consult post FIRE at my leisure.  I generally view available FIRE spend as a % of NW, standard of living + location + etc etc simply improve as NW increases. So then the longer we work, the higher FIRE standard of living we will have.  But even once we have "enough", I do still plan to work until my career peaks or I become so sick of it that I cannot continue on.  This seems to be the optimal exit point imo.   But I do know this is also not following MMM scripture - so I am careful to share such views :)

My wife and I both have advanced degrees, so it just seems so wasteful to stop working after only so many years.  Plus for now - I generally find working enjoyable, my wife ... not so much. Maybe she will FIRE first.  We also talked about a slow FIRE where one only one of us works, in two year increments.  Two on, Two off.  To keep insurance / 401k etc benefits running.  I

We also live in an extremely HCOL area, and have three kids in daycare at the sum of an absurd $4000/mo.  So FIRE + moving + ending dedicated childcare could cut our costs significantly.  Though now with home prices being so much higher, and having a <3% rate on a 30 yr fixed mortgage, I'm not so sure we would ever move.  We also benefit from CA prop13, so only pay taxes on 50% of our home value.  Which makes it seem borderline insane to ever sell/move at this point!

Oh yeah, I've been through that with advanced degrees too.  And scripture or not, if you like working it makes sense to keep doing it!  Having the option to walk can make the job more enjoyable.

[kanga1622]

I work for a state university system. Normally we get 2-2.5% raises. This year we are reportedly getting 6% with the new fiscal year.

As long as health insurance costs don't rise equal to my pay increase, I count myself happy.

[Arbitrage]

I have a friend with a PhD who quit her job at 40 and had the same qualms about "wasting" her advanced degree.  She felt miserable/worthless during her brief time off of work; she was never really on the early retirement bandwagon, but had a lot of complaints about her job that weren't being addressed.  She ended up going back to work (at the same place, part-time, where they finally addressed here complaints), and is very happy for the change.

I haven't had those qualms (I have a PhD as well), nor does my wife with a (mostly unused) JD.  My advanced degrees helped get me to this stage.  I suppose that since we're still working part-time, I can't fully say that I won't have any regrets, but thus far it's never figured into the calculus for early retirement. 

[bryan995]

I have a friend with a PhD who quit her job at 40 and had the same qualms about "wasting" her advanced degree.  She felt miserable/worthless during her brief time off of work; she was never really on the early retirement bandwagon, but had a lot of complaints about her job that weren't being addressed.  She ended up going back to work (at the same place, part-time, where they finally addressed here complaints), and is very happy for the change.

I haven't had those qualms (I have a PhD as well), nor does my wife with a (mostly unused) JD.  My advanced degrees helped get me to this stage.  I suppose that since we're still working part-time, I can't fully say that I won't have any regrets, but thus far it's never figured into the calculus for early retirement.

Interesting - when did you move part-time?  So mostly FIRE now?

I am 36 now, original plan was to be done at age 40. Would have then worked ~12 years or so (3 pre phd, 9 post phd).  Have always considered doing something post FIRE, whether consulting / part-time etc, not sure.  I do think I would struggle with the time off, perhaps similar to what your friend experienced.  Though I am still sold on continuing to work (and job hop) until either comp/career progression stalls or (hopefully) I receive such a large payout (ipo) that any additional dollars become irrelevant to NW/expenses :)

[clarkfan1979]

Ive been helping with hiring as of late. Generally in search of new PhD graduates. The salaries they demand and the competing offers we are seeing have increased > 30% since just the beginning of this year (150-170k base!)

Could be inflation. Could be an arms race to hire talent. Could be all of the above.

But for the average employee staying put (anywhere), they are now being severely underpaid.

Either push for huge promotions or switch jobs. It makes absolutely no sense to ever stay put somewhere >2-4 years unless you are a top 5% performer and are receiving constant compensation adjustments and promotions.

I’ve averaged probably close to 20% per year over 6 years, working in tech. 5 promotions. 2 companies.

It does make sense if you like your job and don't really need the money. In 2015, I was teaching college and my base was $42,600. I got a call from a head hunter. An energy non-profit offered me a job in the past, but I turned it down because I didn't think it was enough money. It was in Washington, D.C., which was a high cost of living. They doubled the salary and wanted to offer me the job again at 125K. I was happy with my current job, living close to family, $650/month mortgage and 4 months of vacation, so I turned it down again. 

[Arbitrage]

I have a friend with a PhD who quit her job at 40 and had the same qualms about "wasting" her advanced degree.  She felt miserable/worthless during her brief time off of work; she was never really on the early retirement bandwagon, but had a lot of complaints about her job that weren't being addressed.  She ended up going back to work (at the same place, part-time, where they finally addressed here complaints), and is very happy for the change.

I haven't had those qualms (I have a PhD as well), nor does my wife with a (mostly unused) JD.  My advanced degrees helped get me to this stage.  I suppose that since we're still working part-time, I can't fully say that I won't have any regrets, but thus far it's never figured into the calculus for early retirement.

Interesting - when did you move part-time?  So mostly FIRE now?

I am 36 now, original plan was to be done at age 40. Would have then worked ~12 years or so (3 pre phd, 9 post phd).  Have always considered doing something post FIRE, whether consulting / part-time etc, not sure.  I do think I would struggle with the time off, perhaps similar to what your friend experienced.  Though I am still sold on continuing to work (and job hop) until either comp/career progression stalls or (hopefully) I receive such a large payout (ipo) that any additional dollars become irrelevant to NW/expenses :)

I went part-time, and moved, last summer.  Age 43 then.  I do think I'll need something to exercise my brain when I go full FIRE, but I'm not anticipating the same sort of struggle with no longer utilizing my specific degrees or feeling worthless.  The mental challenges may come from picking up a new skill - always wanted to get into coding more seriously, for example. 

[gooki]

Yeah but you should be getting those raises when you job hop and you need to be job hopping.  Including job hopping my average raise has been 10% a year over the last 10 years

100% this. I mentioned above about averaging 2-3% raises. Yet my average raise for job hopping is 30%. Do that three times and you've doubled your salary.

[Telecaster]

Thanks all.  My original question came to mind after listening to the recent "Afford Anything" podcast with Paula Pant.  The guest on there was talking about investing at least 50% of of annual raises and being comfortable spending the other half.  But then he clarified that he only meant feeling comfortable spending the other 50% of the amount above the rate of inflation.  And that made me think... I only "earn" 2-3% annual "performance increase", which has been around the rate of inflation since I've been working (18 years).  Am I alone?  Do other people get higher raises, and are those people spending 50% of that amount above the rate of inflation on lifestyle inflation?

But alas... sounds like most people don't actually make more than inflation except by job hopping.  And once again... one of those podcast smartypantses has good ideas but is out of touch with reality.

The notion of the annual raise has been a myth for a long time, and maybe never existed.  In theory, over the course of a year you have learned more, become more skilled at your job, and therefore are more valuable, and therefore deserve a raise.   But companies don't look at it like that.  They want to pay you the minimum amount to keep you from leaving.  And the only way to know that amount is if some people leave.  If everyone stays, then the wages are too high. 

If they would have left out the word "annual" it would have been good advice.  Hedonic adaptation is a thing.  If you can let your salary grow faster than your expenses you are in a good place.