- Cost today for this care setting
- $114,660 / yr
- First year of care at age 80
- $305,665
- Total over 3 year(s)
- $954,163
- Reserve needed today (present value)
- $268,220
- Years of compounding before care starts
- 25 years
Care inflation of 4.0% compounds over 25 years before the first bill. This projects cost only — it does not price an insurance policy.
Where the cost figures come from
Starting points reflect recent US national medians: about $34 an hour for a home health aide, roughly $5,900 a month for assisted living and around $9,555 a month for a semi-private nursing home room. Regional variation is enormous, so override the defaults with quotes from your own area where you have them.
Inflation and discounting
Care costs historically outpace general inflation because of wage pressure in a labour-intensive industry. Each future year is inflated at your assumed rate, then discounted back to today at your investment return so you can see the lump sum that would fund it if care started on schedule.
What this does not price
We deliberately do not estimate long-term care insurance premiums: pricing varies too widely by age, health, benefit trigger and inflation rider to reduce to a formula. Use the reserve figure when comparing quotes you actually receive.
Frequently asked questions
Why not just rely on Medicare?
Medicare covers short skilled-nursing stays after a hospitalisation and limited home health care, not long-term custodial care. Medicaid does cover it, but only after assets are largely spent.
How many years of care should I plan for?
About three years is the average for people who need paid care at all, though women's average need is longer. Planning for the average is fine for a reserve; insurance is bought against the tail.
What if care starts later than planned?
Later is cheaper in present-value terms because there are more years of compounding before withdrawals begin and fewer years to fund, which is worth modelling both ways.