Human Life Value
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Human Life Value |
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One of your most important assets is your ability to earn a paycheck. This calculator
is designed to help you understand today's value of your future earning. Use this
calculator to determine your economic value for your loved ones... your Human Life
Value. |
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Definitions |
- Years until retirement
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Number of years before retirement.
- Current annual income
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Your current annual income. If you are married, this should not include any income
from your spouse.
- Return on investments
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This is the annual rate of return you expect from your investments after taxes.
The actual rate of return is largely dependant on the type of investments you select.
From January 1970 to December 2006, the average compounded rate of return for the
S&P 500, including reinvestment of dividends, was approximately 11.5% per year (source:
www.standardandpoors.com). During this period, the highest 12-month return was 61%,
and the lowest was -39%. Savings accounts at a bank pay as little as 1% or less.
It is important to remember that future rates of return can't be predicted with
certainty and that investments that pay higher rates of return are subject to higher
risk and volatility. The actual rate of return on investments can vary widely over
time, especially for long-term investments. This includes the potential loss of
principal on your investment. It is not possible to invest directly in an index
and the compounded rate of return noted above does not reflect additional sales
charges and fees that funds may charge.
Insurance products may additionally include mortality, expense risk charges,
cost of insurance, administrative, and surrender charges that will have a significant
impact on the total rate of return for the investment.
- Expected annual inflation rate
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What you expect for the average long-term inflation rate. A common measure of inflation
in the U.S. is the Consumer Price Index (CPI), which has a long-term average of
3.1% annually, from 1925 through 2006.
- Expected income growth
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Annual percent increase you expect in your annual income.
- Human life value
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This is the total amount you would need invested today, to equal the total earnings
of a person's lifetime. Two values are calculated for you. The first includes only
your expected income growth, the second includes your expected income growth plus
the impact of inflation.
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