Long Term Care Calculator

Enter the five inputs and click calculate.  The screen will display how long the assets may last.  Clicking the DOCUMENTATION button will display a spreadsheet that shows a year by year summary of assets balances and expenses (adjusted for inflation).

Be careful to avoid misleading or misrepresenting what happens to a family's assets when one spouse is in need of long-term care.  Explain this screen is meant only as an illustration.  Mention that other factors should be considered when determining asset depletion in light of long-term care expenses.

Direct consumers to a professional tax advisor or attorney for more information on planning for long-term care needs and estate preservation.

No example script available for this screen.

How long the client’s assets will last for long term care is solved in a simple five-column spreadsheet. This spreadsheet is displayed when the DOCUMENTATION button is clicked.  Each row in the spreadsheet represents one year.  There will be a row for each year the assets last or 100 rows if the assets continue to grow faster than the expenses.

The words “liquid assets” are used on this screen.  However, you may include all assets and explain to the client that they must allow plenty of time (years) to liquidate hard assets such as real estate.

A description of each column in the spreadsheet follows:

Column One: This is the row or year number.  It starts from the present or today.

Column Two: This is the balance of the liquid assets at the beginning of each year.  In the first year, it will be the initial amount of liquid assets.  In subsequent years, it will be the ending balance of assets in the prior year.

Column Three: This is the interest earned each year.  It is simply the balance at beginning of the year times the Rate of Return on Assets.

Column Four: This is the expenses for both the healthy spouse and the spouse in the long-term care facility.  The first year it will be the sum of both spouse's expenses.  In subsequent years, it will be the previous year’s expenses times one plus the inflation rate.  For example, if the previous year’s expenses were $100,000 and the inflation rate was 4%, then the current year (row) expenses would be $100,000 X 1.04 = $104,000.

Column Five: This is the balance of the liquid assets at the end of each year.  It is the (balance at the beginning of the year) plus (the interest earned during the year) minus (the expenses during the year).

Estimating the fraction part of an year:

The program adds rows (years) to the spreadsheet until the Assets at the End of the year are negative (consumed) or it reaches 100 rows (years).  When it reaches a negative balance, it estimates how much of the current year will be covered by dividing the assets at the beginning of the current year by the inflation-adjusted expenses for the current year.