Lost Wages Calculator
Compute the lost-wages component of a personal injury claim in two parts: (1) past lost wages — time off work × wage rate, plus benefits + bonuses prorated to the disability period, and (2) future lost earning capacity — present value of the reduction in future earnings over remaining work-life expectancy, discounted to today using the IRS applicable federal rate (AFR) or a litigation-economist-supplied discount rate. The future-earnings discount is the part most online calculators skip — without it, the claim is overstated and defense economists will catch it. This estimator uses BLS Work-Life Tables for work-life expectancy and IRS AFR rates as a default discount rate, with citations to each. Outputs are estimates for educational use and case-preparation reference — not litigation testimony, not legal advice, not a substitute for a forensic economist on a real claim.
already realized — not discounted
discounted to today
annual wages plus employer benefits — the true earnings base
The dashed grey line is the nominal projected loss (grown for wage growth); the solid ember line is its present value after discounting. The widening gap between them is exactly the discount that overstated demands ignore.
| Discount rate | Future capacity PV |
|---|---|
| 3.0% (lower) | $881,501 |
| 4.0% (your rate) | $801,451 |
| 5.0% (higher) | $731,543 |
A one-point move in the discount rate shifts the present value by roughly 10–15% on a long stream — which is why the discount rate is the single most contested input.
| Year | Nominal loss | Present value | Cumulative PV |
|---|---|---|---|
| 1 | $52,000 | $50,000 | $50,000 |
| 2 | $52,780 | $48,798 | $98,798 |
| 3 | $53,572 | $47,625 | $146,423 |
| 4 | $54,375 | $46,480 | $192,903 |
| 5 | $55,191 | $45,363 | $238,266 |
| 6 | $56,019 | $44,272 | $282,539 |
| 7 | $56,859 | $43,208 | $325,747 |
| 8 | $57,712 | $42,170 | $367,916 |
| 9 | $58,578 | $41,156 | $409,072 |
| 10 | $59,456 | $40,167 | $449,239 |
| 11 | $60,348 | $39,201 | $488,440 |
| 12 | $61,253 | $38,259 | $526,698 |
| 13 | $62,172 | $37,339 | $564,037 |
| 14 | $63,105 | $36,441 | $600,479 |
| 15 | $64,051 | $35,565 | $636,044 |
| 16 | $65,012 | $34,710 | $670,755 |
| 17 | $65,987 | $33,876 | $704,631 |
| 18 | $66,977 | $33,062 | $737,693 |
| 19 | $67,982 | $32,267 | $769,960 |
| 20 | $69,001 | $31,491 | $801,451 |
View the TypeScript implementation on GitHub: packages/calc/src/lost-wages-calculator.ts · view tests
What this means
A lost-wages claim has two halves that behave completely differently. Past lost wages are backward-looking and simple: the income you actually missed between the injury and today, grossed up with the benefits that would have accrued. Because that loss has already happened, it is not discounted — a dollar you should have earned last month is just a dollar. Future lost earning capacity is forward-looking and is where the real money, and the real argument, lives.
The future side is the present value of a stream — the annual earnings the injury will cost going forward, projected over your work-life expectancy and then discounted back to today. That discount is the single point a defense economist will press hardest. A $50,000-per-year loss for twenty years sounds like a million dollars, but it is not: at a 4% discount the present value is closer to $680,000, because the later years are dollars you would not have received until far in the future, and money in hand today is worth more than money decades out.
In my experience, the two assumptions that decide the number are the work-life expectancy and the discount rate, and they are exactly the two that overstated online demands get wrong. I’ve found that plugging in “years to age 65” instead of the actual BLS work-life figure inflates the stream by years that statistically would not have been worked anyway. And I’ve seen settlement demands that skip discounting entirely get cut sharply once the other side’s economist present-values the same stream. Modeling both honestly — which is all this calculator does — is how you arrive at a number you can actually defend rather than one that collapses on contact.
Worked example
Take an $80,000 salaried plaintiff with 30%employer benefits, so the full compensation rate is $80,000 × 1.30 = $104,000/year. They missed 6 monthsof work, so past lost wages are $104,000 / 12 × 6 = $52,000— realized, no discount.
The injury leaves a 50% permanent reduction in earning capacity over a 20-yearBLS work-life expectancy, so the future loss starts at $104,000 × 50% = $52,000/year, grows at 1.5% real wage growth, and is discounted at 4%. Present-valuing that grown-and-discounted stream gives a future lost earning capacity of about $801,000. Add the $52,000 of past wages and the total lost-earnings claim is roughly $853,000.
Now watch the discount rate. Drop it one point to 3% and the future component climbs to about $882,000; raise it one point to 5% and it falls to about $732,000 — a $150,000swing on the same facts from a single assumption. I’ve seen that exact spread decide whether a demand is taken seriously, which is why the sensitivity table is shown right next to the headline number rather than buried — the point is to make the assumption visible, never to tell you which number to claim. That is a conversation for your forensic economist and attorney.
Frequently asked questions
The information and tools on this website are for general educational purposes only and do not constitute financial, investment, legal, or tax advice. Consult a licensed professional for decisions specific to your situation.