The basic purpose of a personal injury lawsuit is to compensate the victim
for his or her losses resulting from the injuries. Losses in a personal
injury case are often more than just medical expenses. Any economic loss
that is the direct result of the incident can be a basis for compensation.
This can include lost wages, and in some cases, loss of future earnings.
The question many clients ask, though, is how can you determine what those
earnings would have been?
What is Meant by Future Earnings?
First, before you can calculate future earnings, you must understand what
this term actually means. Compensation for future earnings basically refers
to compensating a victim for that person's inability to continue to
earn money as a result of his or her injuries. The inability to earn does
not have to be permanent or complete. In other words, you can recover
for any lost earning capacity, even if partial or temporary. The terms
"future earnings" and "future wages" may also be referred
to as “loss of future earning capacity."
Injured in an accident? Call us to get help today!
The Challenge of Calculating Future Damages
Determining an individual's future earnings can be very tricky. This
figure often includes more than just future lost paychecks. It can also
include loss of pension or retirement and other work benefits. Unfortunately,
defining future benefits can be more difficult than basic wages. The biggest
challenge is estimating what could be earned in the future and then reducing
it to the “present value,” in order to avoid overcompensation.
A calculation of present value takes into account:
- Interest rates
- Other economic indicators
How Is Lost Earning Capacity Determined?
It is important to remember that loss of future earnings is based on your
potential to earn money, regardless of whether you actually exercise that
potential. The court typically estimates the earning capacity before the
injury, compares that capacity 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.” If you are confused,
you are not alone, but your personal injury attorney can guide you through
If you have questions regarding a personal injury matter,
contact us online or by calling the Law Office of Cody R. Wix, LLC at (205) 381-4787.