Calculator
Long Term Care Calculator
Long Term Care Calculator
Typical monthly costs (Genworth): home health aide ~$6,200 · assisted living ~$5,500 · nursing home private room ~$9,700. Long-term care costs have historically inflated faster than general CPI — plan with 3–5%.
Total Projected Care Cost
$621,279.19
Care Funding Analysis
Care costing $8,000/month today inflates to about $16,750.22/month by age 80, and 3 years of it totals $621,279.19. After $92,727 of income offsets and $100,000 of earmarked savings, the funding gap is $428,552.19. Closing it before age 80 requires setting aside roughly $17,142.09 per year (before investment growth) — or covering part of the risk with long-term care insurance, which trades a known premium for this open-ended liability.
*Projects costs using your assumptions for care type, duration, and care-cost inflation. Actual costs vary sharply by state and care level. Educational only, not insurance or financial advice.
The Retirement Expense Nobody Budgets
Long-term care is the largest uninsured expense most Americans will ever face — and the one most commonly left out of retirement plans. The numbers are stark: roughly 70% of people turning 65 will need some form of long-term care, and a private room in a nursing home now runs over $100,000 a year in much of the country. Medicare, the program most retirees assume will cover them, pays only for short post-hospital skilled care — not the months or years of custodial care that most people actually need. Medicaid does cover long-term care, but only after you have spent down almost everything you own. That gap is why this is fundamentally an investing question. The care you may need in twenty or thirty years must be funded out of the portfolio you are building today, and the math is unforgiving because care costs inflate faster than general prices — often 4% or more per year. A three-year nursing home stay that costs $350,000 in today's dollars can cost well over half a million by the time you reach it. Households that price this expense early can fund it with a modest annual savings plan or transfer the risk with insurance; those that wait often discover the bill exactly when they can least pay it. This calculator turns a vague worry into a dated, inflated dollar target and a funding gap you can act on now.
Inflating Today's Prices to Your Future Bill
The engine is care-cost inflation applied in two stages. First, today's monthly cost is compounded forward from your current age to the age care begins: a $8,000/month cost at 3% inflation becomes roughly $12,000/month twenty-five years out. Second, each year of care is inflated forward from the start date, because costs keep rising even during the care period itself — year one is priced at one rate, year two at the next, and so on, and the total is the sum of those inflation-adjusted annual costs. Against that total, the tool credits two funding sources: ongoing income received during the care period (Social Security or pension checks still arrive, and are inflation-adjusted over the care years) and the savings you have earmarked for this purpose. The shortfall after both offsets is the funding gap. To show what closing it requires, the gap is divided by the years remaining until care begins — a simplified annual target that does not credit investment growth, so the real required saving is lower, but the number gives a safe, conservative pace. The model deliberately uses today's prices as the honest starting point; users in high-cost states should raise the base cost, since regional variation is the largest single input error.
Expert Insights
The 70% Number Deserves Real Planning Weight
Actuarial estimates put the probability of needing some long-term care after 65 near 70% — with women, who live longer, facing longer average care periods. Yet most retirement budgets allocate nothing specific to it. Planning for a 70%-probability expense should not mean panic-buying insurance, but it does mean a named line in the plan: either earmarked savings growing toward an inflated target, or a purchased insurance transfer. The households that fail are the ones that treated the risk as someone else's statistic right up until it was their hospital room.
Insurance and Self-Funding Solve Different Problems
Self-funding handles the average case — a short stay financed from savings. Insurance exists for the tail — the five-year memory-care stay that consumes $700,000. For portfolios under roughly $1.5 million, a hybrid life-with-LTC policy or a traditional LTC policy often makes sense, because the tail risk can consume the entire retirement plan. Above $3–4 million, self-insuring becomes viable, and premiums may no longer be worth paying. The decision line is portfolio size relative to the worst plausible bill, not comfort with insurance as a category.
Care Inflation Is the Silent Multiplier
General inflation runs around 2–3%, but health and care costs have historically compounded faster, driven by labor-intensive services that cannot be automated. Using 2% instead of 4% for a twenty-year projection understates the same three-year stay by tens of thousands of dollars — and that is before accounting for the possibility that care demand outstrips supply in aging regions. The fix is simple: build with 3.5–5% care inflation as the default assumption, and treat any plan that only clears at 2% as fragile rather than finished.
Actionable Tips
- 1
Price the Actual Care Type You Would Want
Run three scenarios: in-home aide care, assisted living, and nursing home — using current local rates from Genworth-style cost surveys or regional providers. The spread can be 2x within the same zip code, and most people's preferences (aging in place at home) are not the cheapest option. Price the scenario you would actually choose, not the cheapest one, because the plan has to fund reality, and the gap between what you want and what you budgeted is discovered at the worst possible moment.
- 2
Decide the Funding Source Before Age 65
Insurance underwriting deteriorates sharply after the mid-sixties, and some products become unavailable, so the buy-or-self-insure decision belongs in your fifties. If insurance: compare at least three carriers and understand elimination periods and benefit triggers. If self-funding: name a dedicated account and automate contributions toward the inflated target this tool produces — a named bucket survives market drawdowns better than a vague assumption spread across the whole portfolio.
- 3
Re-Run the Projection Every Three Years
Care costs, your portfolio, your health outlook, and product availability all drift. A projection run at 55 is a baseline, not an answer. Every three years re-check the inflated target against current savings growth — if investment returns are beating the plan, the required annual save drops; if care costs have spiked faster than modeled, the gap widens. The discipline of rechecking is what converts a one-time calculation into an actual plan that is true when you need it to be.
Real-World Examples
The Freemans Funded a Five-Year Gap With Four Good Years
At 58, the Freemans ran this tool expecting assisted living at $5,500/month; the projection showed $390,000 of inflation-adjusted cost and a $210,000 gap after their earmarked savings. They redirected $22,000 a year into a dedicated balanced account and bought a modest LTC rider on his life policy. Four years of saving closed the gap, and the rider capped the tail. When Carol actually needed three years of memory care at 84 — pricier than assisted living — the combination absorbed the bill without touching their primary retirement portfolio or selling the house early.
Diane's 'We'll Rely on Medicare' Plan Hit Reality
Diane's husband had a stroke at 71. The family assumed Medicare covered what came next; it covered only the first weeks of rehab. The next stop was home health at $6,200 a month — a bill with no coverage attached, funded by draining the brokerage account month by month for thirty-one months. The money was there, barely, but the withdrawal sequence wrecked their portfolio's longevity math. Diane's takeaway for everyone she talks to: the care years are not a medical event, they are a financial event, and they must appear in the plan before they appear at the door.
Martin Self-Insured — and Kept the Premiums
Martin, a CPA, sized his worst case with this calculator at 60: a four-year nursing home stay, inflated to $520,000 by his target age. With a $4.1 million portfolio, he concluded self-funding made sense and declined LTC premiums of $4,800 a year, instead earmarking a ladder of short-term bonds for the scenario. He invested what he saved and never needed the care. The decision was right for him because the math cleared at his portfolio size — the lesson is not 'skip insurance' but 'run the number, then choose deliberately rather than by default.'
Glossary of Terms
- Custodial Care
- Help with daily living activities — bathing, dressing, eating, mobility — rather than medical treatment. It is what most long-term care actually is, and it is what Medicare generally does not pay for.
- Care-Cost Inflation
- The rate at which long-term care prices rise, historically faster than general inflation due to labor-intensive services. Using a 3.5–5% planning rate instead of general CPI materially raises projected future bills.
- Medicaid Spend-Down
- The process of exhausting countable assets to poverty-level limits to qualify for Medicaid coverage of long-term care. It is why many middle-class families ultimately receive Medicaid-funded care — after their savings are gone.
Frequently Asked Questions
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Ivy Sinclair-Wren
Financial Chaos Analyst
Ivy Sinclair-Wren is a Financial Chaos Analyst covering investing, AI, wealth psychology, and the emotional consequences of opening finance apps during market crashes. Based in Melbourne, she specializes in demystifying the US tax code and helping users navigate the intersection of spreadsheet logic and human irrationality.