Planning for Retirement for Personal Injury Victims
In catastrophic injury cases where the innocent victim will not work again or has returned to work but is likely to retire earlier due to the injuries and ongoing pain, a crucial assumption in the calculation of the future income loss is the retirement age.
Both plaintiff counsel and defence counsel will base their calculations on a presumed retirement age. Defence counsel like to use the idea of “Freedom 55” and assume that many people retire at age 55 which greatly reduces the future income loss calculation. However, recent statistics from Statistics Canada show a different trend – two statistics life expectancy and retirement age are both increasing. The life expectancy for females has increased from 61 years in 1920 to 84 years in 2011, and from 59 years in 1920 to 80 years in 2011 years for males, combine that with the statistic that over the past ten years the average retirement age of workers in the private sector has increased from 61.5 to 63.5 for men and from 61 to 63.1 for women.
Furthermore a 2012 Statistics Canada report on retirement age says that in 2009, a 50 year old worker could expect to continue working for an average of 16 more years, which means retiring at age 66.
Combine this with the fact that Canada Pension Plan Benefits are capped at just over $12,000.00 per year, undercompensating an injured auto accident victim can become an easy error for a court to make in its Judgment.
If the injury lawyers involved do not use the correct retirement age, it could be a huge financial blow for the accident victim in his or her later years.
The above statistics are even more problematic when it is a young plaintiff injury victim. For example if the plaintiff is currently 25 years of age and the defence is suggesting he or she will likely retire at age 60, this ignores the above trends and statistics with regard to overall life expectancy and retirement age, with the result that a 25 year old will be greatly undercompensated if the assumed retirement age is age 60. It is important for your injury lawyer to utilize an economist who is aware of these statistics and the increasing retirement age and increasing life expectancy to insure that you are not under compensated in the long term future.