Estimating Remaining Years of Work Life

The heart of analyzing lost earnings and wages is estimating by how much injury or death decreased a person’s lifetime earning capacity. This requires estimating how many years the injured or deceased party have otherwise continued working. In some cases, there may have been definite plans for retirement from the labor force at some specific age. This is more likely to be the case for older workers. As long as these plans are known and credible, they can serve as the basis for the estimate of lost earnings. More often, the economist will have to choose some assumption for remaining work life. The simplest assumption is that retirement would come at the age of eligibility for full Social Security benefits. An alternative is to use government data on the median number of years to retirement for workers at any given age and assume that the person would have continued employment for that length of time. These assumptions ignore the reality that many people do not conform to these retirement patterns. Many continue in the labor force into their seventies and even longer.
“Experts” who use these easy assumptions, who may be economists or accountants, typically also ignore the fact that workers at any age have some statistical probability of not being able to continue earning income due to death, physical incapacity, or unemployment. Any sound estimate of future earnings must be adjusted to account for these realities. To overcome these difficulties, competent forensic economists most often use published tables that report the average number of remaining years of employment people have at any age. These tables use information supplied by the federal government on employment and death rates for people in various sex, age, race, and educational groups. With these tables, an economist has a sound basis for estimating lost income that can be easily explained to a jury.