Your Lifetime Earnings

Changing phases of life Have you ever sat and wondered. Maybe on a monday morning feeling lethargic and then proceed to as...

Changing phases of life

Have you ever sat and wondered. Maybe on a monday morning feeling lethargic and then proceed to ask yourself why you have to get up and go to work? Asides the therapeutic effects of working (yes there are), it helps to know how much you are really working for.

I have done an analysis of a basic scenario of a moderate career track spanning 35 years as allowed by the Nigerian Labor Laws. All figures are in Nigerian Naira and the tax laws applied are those prevailing at the time of writing this article. 

I assume a scenario where a graduate finished school at about 23 years after the hurdles of JAMB and University strikes. I have also tried to calculate the present value of future earnings. To all non finance readers, this is simply determining how much N1 in the future is worth today. 

Please note that this is not an authoritative salary guide. Take a look at the table below.

Year	Age	Gross Pay	Tax	Pension	Net After Tax	Present Value
1	23	1,500,000	97,125	120,000	1,282,875	1,282,875
2	24	2,000,000	157,500	160,000	1,682,500	1,463,043
3	25	2,500,000	226,625	200,000	2,073,375	1,567,769
4	26	3,500,000	378,875	280,000	2,841,125	1,868,086
5	27	3,500,000	378,875	280,000	2,841,125	1,624,422
6	28	3,500,000	378,875	280,000	2,841,125	1,412,541
7	29	4,000,000	455,000	320,000	3,225,000	1,394,256
8	30	4,000,000	455,000	320,000	3,225,000	1,212,397
9	31	4,000,000	455,000	320,000	3,225,000	1,054,258
10	32	7,000,000	962,000	560,000	5,478,000	1,557,189
11	33	7,000,000	962,000	560,000	5,478,000	1,354,078
12	34	7,000,000	962,000	560,000	5,478,000	1,177,459
13	35	10,000,000	1,484,000	800,000	7,716,000	1,442,176
14	36	10,000,000	1,484,000	800,000	7,716,000	1,254,066
15	37	10,000,000	1,484,000	800,000	7,716,000	1,090,492
16	38	10,000,000	1,484,000	800,000	7,716,000	948,254
17	39	10,000,000	1,484,000	800,000	7,716,000	824,569
18	40	10,000,000	1,484,000	800,000	7,716,000	717,016
19	41	13,000,000	2,006,000	1,040,000	9,954,000	804,334
20	42	13,000,000	2,006,000	1,040,000	9,954,000	699,421
21	43	13,000,000	2,006,000	1,040,000	9,954,000	608,192
22	44	13,000,000	2,006,000	1,040,000	9,954,000	528,863
23	45	13,000,000	2,006,000	1,040,000	9,954,000	459,881
24	46	15,000,000	2,354,000	1,200,000	11,446,000	459,836
25	47	15,000,000	2,354,000	1,200,000	11,446,000	399,858
26	48	15,000,000	2,354,000	1,200,000	11,446,000	347,702
27	49	15,000,000	2,354,000	1,200,000	11,446,000	302,350
28	50	15,000,000	2,354,000	1,200,000	11,446,000	262,913
29	51	15,000,000	2,354,000	1,200,000	11,446,000	228,620
30	52	15,000,000	2,354,000	1,200,000	11,446,000	198,800
31	53	15,000,000	2,354,000	1,200,000	11,446,000	172,870
32	54	15,000,000	2,354,000	1,200,000	11,446,000	150,321
33	55	15,000,000	2,354,000	1,200,000	11,446,000	130,714
34	56	15,000,000	2,354,000	1,200,000	11,446,000	113,665
35	57	15,000,000	2,354,000	1,200,000	11,446,000	98,839
		354,500,000	53,050,875	28,360,000	273,089,125	29,212,126

The analysis shows that a total of N354million is to be earned over a 35 year career. With about N50m saved up as pension and about N53million contributed to the development of society through taxes. 

From this analysis, it is clear that certain things are possible in your lifetime. High flyers are also likely to earn way more than this. 

There are many other inferences I can draw from this data but I'd leave you to analyze and draw your own conclusions.

Assumptions

• Retirement Age of 60 or 35 years of work
• Current Tax Laws (PITAM 2011)
• Pension Reform Act 2014
• Gross Pay doesn’t include non-cash allowances
• Compound Interest
• Yields would not drop below 15%
• Every little chunk can be invested
• 15% After tax return