How this calculator works
Long term care is help with daily living over a long period, such as home care, assisted living or a nursing home. Its cost tends to rise faster than general inflation because care is labour-intensive, so this calculator lets you set the growth rate separately. It converts today's cost into an annual figure, grows it for the number of years before care starts, then compounds it through each year of care. The total is what you would pay over the whole period in future dollars. The same bill in today's money is simply the annual cost at today's price times the number of years, which is useful for comparing against savings or insurance cover. The model assumes the cost you enter is the full cost of care, with no subsidy, insurance payout or government benefit. In practice, the level of care can change over time, with home care often preceding a move to a facility, and the cost can differ a lot between regions and between public and private providers.
Formula
Annual cost today = monthly cost x 12, or daily cost x 365. Annual cost when care starts = annual cost today x (1 + growth)^years until care. Annual cost in care year k = that figure x (1 + growth)^k, for k from 0. Total nominal cost = the sum of those annual costs. Total in today's money = annual cost today x number of years.
Worked example
Care costing $4,500 a month today, starting in 10 years and lasting three years, at 4% growth. The annual cost today is $54,000 and the annual cost when care starts is $79,933.19. The three years cost $79,933.19, $83,130.52 and $86,455.74, for a total of $249,519.45. In today's money the same three years cost $162,000.
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Frequently asked questions
How much does long term care cost?
It varies enormously by country, region and level of care. In the United States, a private nursing home room has recently cost well over $100,000 a year in many areas, while home care is charged by the hour. In Canada, publicly funded beds charge a regulated daily rate, and private facilities cost more. Use a local survey for your area.
Why use a growth rate above general inflation?
Care is labour-intensive, and wages in the sector tend to rise faster than prices overall. A rate of 3% to 5% is a common planning range, but it should reflect local experience.
Does this include government benefits or insurance?
No. Subtract any expected benefit or insurance payout from the annual cost before entering it, or treat the total as the gross cost that the benefits would offset.
Should I plan for care in today's money or future dollars?
Both are shown. The future total is what you would actually pay; the today's-money total is easier to compare with your current savings and investments, because those also grow over time.
Can care be needed sooner than planned?
Yes. An accident or illness can bring care forward with little warning, which is why a plan should include some cover for the near term as well as the projected future cost.