What's the difference between years of worklife and years to retirement?

The Tinari Brief – a continuing series

Covering trends, research and recent cases involving damages issues.

Let's say there is a 40-year-old injured plaintiff who is no longer able to be employed. Let's assume that he would have retired at age 65. Should the damages expert calculate 25 years of future earnings losses? The answer is "no", but why? The reason is that there is something called a person's worklife expectancy that helps determine the number of years of loss that would be reasonable and credible. Worklife data tell us how many years a person would likely be employed in the labor force.

The fact is that most people will not work every month and every year until the date of retirement. Both voluntary and involuntary factors tend to remove people from the labor force, often for relatively brief time periods. For example, an elderly parent's health takes a turn for the worse and an adult child becomes the parent's caretaker for 3, 6, or 12 months. Or, a worker may decide to switch occupations, and enroll in a one- or two-year education or training program. Or, someone may get seriously ill and drop out of the labor force for a time. These and many other examples help explain why economists would not expect a person to work every month and every year until retirement. Studies of government data that are then used to create worklife tables are published periodically in forensic economics publications. Worklife expectancy data are typically calculated by gender, age, and educational attainment, so worklife expectancy can be tailored to some extent to each plaintiff's situation.

HINT: to reduce the chance of having your damages expert challenged or, worse, prevented from testifying, make sure your damages expert is aware of and takes into account worklife expectancy data.

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