Human life value calculator

How to use it

1. Enter your age and the age you expect to stop working.
2. Enter your annual income and the yearly raise you expect.
3. Enter your average income tax rate and the share of your pay you spend on yourself: food, clothes, car, fun.
4. Enter a discount rate, which is the safe return you could earn on money received today.

The large number is the human life value. Below it, a short table shows what you would contribute in your first year and at five-year steps, with a running total.

How the math works

Human life value is the economist's way to put a price on future earnings, covered in the human life value: the economist's way to size coverage guide. The tool does this for each working year, starting this year:

1. Income that year = annual income × (1 + raise) for each year already passed.
2. Contribution = that income × the share that reaches your family, which is 100% minus your tax rate minus your personal spending.
3. Present value = contribution ÷ (1 + discount rate) for the number of years until it would be received. The first year is discounted one year.

Add the present values for every year until retirement and round to the nearest $1,000.

Hypothetical example, using the tool's starting values: age 35, retiring at 67, $80,000 income, 3% raises, 20% tax, 25% personal spending and a 5% discount rate. Your family would receive 55% of your pay. Over 32 years that adds up to about $2.31 million before discounting and about $1,011,000 after discounting.

What it assumes

• Every input is your own estimate. The starting values are placeholders in the tool, not statistics.
• Tax and personal spending are flat percentages for your whole career.
• Each year's income arrives at the end of that year, and you work every year until the retirement age you entered.
• If the three percentages leave nothing for your family, the result is zero.

Where it stops being right

• It is a ceiling, not a purchase target. Insurers limit coverage to a multiple of income that depends on age and underwriting, and the tool does not apply those limits.
• A lower discount rate raises the answer sharply, and a higher one lowers it. Try several to see the spread.
• It counts paid income only. It leaves out the value of unpaid work such as child care, which matters when you compare it with a stay-at-home parent's needs.
• It ignores job loss, pay cuts, employer benefits and Social Security survivor benefits.
• It values a future stream of earnings, whereas a family also needs cash right away for a mortgage or a funeral.

For a bottom-up estimate of what a family needs, use the How much life insurance do I need?. The income replacement: the 10x rule and better ways guide covers the common income-multiple shortcuts, and inflation and your death benefit shows how rising prices erode a fixed death benefit.