Calculating Future Earnings

In personal injury cases, the purpose of awarding damages is to compensate the victim(s) for any losses that result from the injuries.

Losses can come in many different varieties. Expenses that are a direct result of the incident include things like medical bills and lost wages during the time of recovery.

These types of damages are easy to calculate because the victims receive bills for medical expenses, and can obtain work attendance records to establish time lost at work.

However, there are more indirect damages, as well, that really only occur in the future, such as future earnings lost by the inability to continue working. Calculating future earnings can be a real challenge.

What is Future Loss of Earnings?

Future loss of earnings simply refers to recovery for the reduction in the plaintiff’s ability to earn money, as a result of his or her injuries.  This type of damage is awarded in cases where the injuries have permanently limited the plaintiff’s ability to earn wages, either partially or completely.

Future loss of earnings is also referred to as “loss of future earning capacity” or “impairment of earning power”.

Determining Future Earnings

Future earnings can include more than just future lost pay checks. They can also include loss of pension and retirement benefits, if applicable in your personal injury case.  Calculating future benefits can be even trickier than simple future wages.

Because most victims want to be compensated now, future damages must be first calculated, and then reduced to their “present value.”

The important thing to remember is that awards for loss of future earnings are based on the person’s potential to make money, even if they have never actually exercised that potential.

What Does Present Value Mean?

The value of future damages must be converted into their value based on today’s dollar.

What does that mean?

Consider that 20 years ago, a dollar could buy much more than it does today. Therefore, 20 years from now, the same dollar will buy a lot less than it does today. Court’s use the “present value” in order to prevent overcompensation. A calculation of present value takes into account interest rates, inflation and other economic indicators.

How Is Lost Earning Capacity Calculated After an Accident?

It may be surprising, but future loss of earnings is not calculated based on the injured party’s actual earnings, but instead on the person’s ability to earn money.

The court estimates the earning capacity before the injury, compares it to the reduced earning capacity that has resulted from the injuries.  The damages award is then issued based on the difference in “potential earning power.”

Also, the fact that the plaintiff was not completely disabled due to the injury will not prevent or reduce their claim for future loss of earnings. However, the award may be reduced completely barred if the person had contributed in some way to their own injuries.

Do I Need to Hire a Lawyer?

If you have incurred an injury that you believe has impaired your ability to earn wages in the future, it is possible for you to recover those future losses.

The laws regarding damages for future loss of earnings can vary from one state to the next.

For instance, recovery may be limited if the victim contributed in some way to his or her own injury, or there was a pre-existing injury or condition involved.  It would be wise to consult a personal injury attorney to assist you in making sure you receive all of the compensation to which you are entitled.

Contact an Experienced Personal Injury Attorney for Help

If you have questions regarding future damages, or any other personal injury issues, give our injury lawyers a call at (800) 364-8305 or send an online message.

Author Photo

Wesley Cottrell

Wes Cottrell earned his B.A. from Pittsburg State University in 1981 and his J.D. from the Washburn University School of Law in Topeka, Kansas in 1985. He was admitted to practice law in Kansas in 1986, in Missouri in 1987, in Arkansas in 1989, and Oklahoma in 1993. He is licensed to practice law in the United States District Court for the District of Kansas, eastern Arkansas, western Arkansas, and western Missouri. He was Deputy Prosecuting Attorney in Crawford County, Kansas from 1987-1989.

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