What is Future Loss of Earnings and Why Should You Care?
Future loss of earnings represents the total income you would lose due to an event like workplace injury or illness that prevents you from working. Understanding this figure is crucial for financial planning, insurance claims, and legal matters.
Calculating potential loss helps you prepare for income gaps and make informed decisions about your situation.
How to Calculate Future Loss of Earnings
The formula for future loss of earnings is:
$$\text{Future Loss} = \frac{\text{Annual Salary}}{365} \times \text{Days Lost}$$
Where:
- Annual Salary is your average yearly earnings ($)
- Days Lost is the total number of days you cannot work
Calculation Example
Given:
- Annual Salary: $80,000
- Days Lost: 150
Step 1: Calculate daily earnings rate:
$$\text{Daily Rate} = \frac{80000}{365} \approx 219.18$$
Step 2: Calculate total loss:
$$\text{Future Loss} = 219.18 \times 150 = 32877$$
You would lose approximately $32,877 from 150 days of missed work.
Loss Calculation Summary
| Description | Value |
|---|---|
| Annual Salary | $80,000 |
| Days Lost | 150 |
| Daily Earnings Rate | $219.18 |
| Total Loss | $32,877 |