Calculating Future Lost Earnings for Settlements

A severe injury can result in catastrophic disabilities that make it difficult (if not impossible) for the injured person to continue working, derailing their career, future opportunities, and retirement plans. The income and benefits you would have earned had there not been an accident are called ‘lost future earnings.’

Arizona law allows victims of accidents to recover lost wages that occurred during their recovery and lost future earning capacity. To get an idea of how much you might be compensated for future lost earnings, use our free personal injury settlement calculator.

How Future Lost Earnings Are Calculated

The formula typically used to calculate future lost earnings is:

Future Lost Earnings = Annual Earning Capacity × Remaining Work Years – Adjusted Future Earnings

The numbers used for each variable are determined after evaluating:

• Pre-injury earnings: These include salary, hourly wages, overtime, bonuses, tips, and benefits (e.g., health insurance, retirement contributions, etc.) before the accident. Education and anticipated career paths are also considered.
• Work-life expectancy: This is the number of years a person would have likely worked if they were not injured.
• Severity and type of injuries/physical and mental limitations: Experts determine what type of work a person may be able to do after an accident and deduct this from the pre-injury earning capacity. The difference is the lost earning capacity.
• Discount rate: This is the amount of interest the lost future earnings payment would earn if invested. This rate is used to reduce the payment to its present value because the money is being paid upfront and not over the years a person would have worked.

Calculating earning capacity and future lost wages during the settlement process is complicated and usually requires the hiring of vocational, medical, and economic expert witnesses, and submission of extensive supporting evidence.

After these figures are nailed down, the compensation amount for future lost earnings may be reduced by the percentage fault that the victim had in the accident. This is because Arizona is a pure comparative negligence state. Insurance companies will also likely try to reduce their payout when calculating property damage in claims and by arguing that helmets and bike accident claims played a role in the injuries. 

Let Gage Mathers Handle Your Future Lost Earnings Claim

A severe injury can permanently affect a person’s ability to work and their quality of life. Insurance companies will try their hardest to reduce a lost earnings payout as it’s often a very large amount.

Gage Mathers will ensure that solid evidence and accurate accounting are presented to support your future lost wages claims during settlement discussions. We will leverage our extensive experience and passion for the rights of accident victims to secure the largest amount of compensation for our clients!

About the Author

Joseph D'Aguanno

Guided by the belief that being a highly skilled specialist in a narrow field is better than being ordinary in everything, Joseph “JD” D’Aguanno leads Arizona’s best personal injury law firm in Phoenix, AZ. Having extensive cross-training in pre-litigation negotiations and trial lawyer skills, with decades of experience, JD strives to provide clients with the most valuable legal services a personal injury lawyer can provide. Under his direction, Gage Mathers Law Group is an award-winning personal injury law firm providing aggressive representation to victims of a car accident, medical malpractice, dog bite, motorcycle accident, and other injurious events. Gage Mathers is trusted by thousands of lawyers and clients throughout the country because of their reputation for getting clients the maximum compensation they deserve.

Years of experience: Over 24 years
Bar number: 020421
Location: Phoenix, AZ
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