Long-Term Care Cost Calculator

Understanding the Long-Term Care Cost Calculator

The cost of long-term care (LTC) is a significant and often overlooked aspect of retirement planning. As healthcare costs rise, understanding the potential financial impact is crucial. This calculator is designed to project the future annual cost of different types of long-term care, helping you plan for this potential expense.

How It Works

The calculator uses current average cost data and an assumed inflation rate to forecast future costs.

• Your Current Age & Estimated Age Care Begins: The difference between these two ages determines the time horizon for the projection. The longer the time horizon, the more significant the impact of inflation.
• Type of Care: You can select from common LTC options, each with a different current average cost. This calculator uses data from industry sources (like the Genworth Cost of Care Survey) as a baseline.
• Annual Care Cost Inflation: The rate at which you expect the cost of care to increase each year. This is a critical input, as healthcare inflation often outpaces general inflation.

The Formula

The tool uses the future value formula to estimate the cost:

Future Annual Cost = Current Annual Cost * (1 + Inflation Rate / 100) ^ Years to Project

The result provides a powerful, if sobering, estimate of what you might need to pay for a single year of care in the future. This figure can help you in discussions with a financial advisor about strategies to cover these costs, such as self-funding, long-term care insurance, or hybrid life insurance policies.

Frequently Asked Questions