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Personal Injury Litigation Support
| Future Lost Earnings | ||
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| Past Lost Earnings | Undiscounted | Present Value |
7. Race/Ethnicity:
8. Gender:
9. Education:
11. Income Payment Frequency:
Disclaimer: This calculator is intended to give the user only a preliminary indication of the possible lost earning capacity due to a personal injury. It DOES NOT represent the opinion of Research and Planning Consultants, L.P. No warranty of the accuracy of this calculator is offered or implied. A formal estimate requires the application of professional judgment and might depend on several additional factors not included in this demonstration. Total damages due to personal injury might also include compensation for pain and suffering, lost household services and other items. For a complete description of our methodology, please see the paragraphs below. You can also get a thorough explanation of our many professional services by visiting our home page.
Retirement Age: This is the age at which the injured person planned to retire prior to the injury. If the injured person had planned to work indefinitely, then type 'None'. Because there are no estimates of the likelihood that someone past the age of 85 will be physically able to work, the upper bound of the planned retirement age is effectively 85.
Income Payment Frequency: There are two possible choices for this -- Hourly Wage and Annual Salary. Whichever you choose, be sure that the payment amounts you type for boxes 11 and 12 correspond to your selection of income payment frequency.
Pre-Injury Income Payment: This is either the hourly wage rate or the annual salary earned by the injured person at the time of the injury.
Post-Injury Income Payment: This is either the hourly wage rate or the annual salary earned by the injured person after the time of the injury.
Pre-Injury Fringe Benefits %: This is the value of fringe benefits stated as a percentage of the hourly wage or annual salary payment amounts just before the injury occurred. It does not include Social Security or Medicare contributions paid by an employer. It does include employer contributions to pension and retirement accounts. Typically, this figure ranges from 5% to 12%.
Post-Injury Fringe Benefits %: This is the value of fringe benefits stated as a percentage of the hourly wage or annual salary payment amounts after the injury occurred. It does not include Social Security or Medicare contributions paid by an employer. It does include employer contributions to pension and retirement accounts. Typically, this figure ranges from 5% to 12%.
Methodology
Research & Planning Consultants, L.P. uses a variation of the LPE method of estimating lost earning capacity. Those initials stand for Life, Participation and Employment. This method is well-known in the forensic economics literature and derives its name from those three words because it entails the estimation of the probability that an individual would have been living, participating in the labor force and employed had he or she not been injured. Our variation from the standard LPE method is to use an estimate of the probability that the individual would have been physically able to be employed had they not been injured. We use this ability-to-work probability instead of the probability that the individual would be in the labor force because the former more closely matches the legal definition of "earning capacity".
The future lost earnings calculation uses future wage growth rates taken from the OASDI Trustees Report. This report contains the official forecasts of wage and inflation rates by the U.S. Social Security Administration.
Our discount rate is derived using the predicted inflation rates taken from the same OASDI Trustees Report. The real interest rate component of the discount rate is derived from observations of annual three-month T-Bill rates from 1961 to the present. Currently this real interest rate component is 1.52%. We use short-term government bond interest rates because they represent the "purest" interest rate. In other words, the default and inflation risk premiums are smaller for this debt instrument than for any other type of bond.