Calculate how much you need to save to self-insure long-term care costs, with investment growth projections and comparison to LTC insurance premiums.
Self-insuring for long-term care means setting aside and investing enough savings to cover potential care costs without purchasing LTC insurance. This strategy can work well for individuals with significant assets, good investment discipline, and the ability to accept the financial risk if care is needed earlier or longer than expected.
This calculator compares two paths: (1) saving and investing a dedicated LTC fund vs. (2) paying LTC insurance premiums and investing the difference. It projects the growth of your dedicated fund and shows whether it would cover projected care costs.
Self-insuring carries risk: you might need care sooner than expected, for longer than planned, or costs might rise faster than your investments grow. Use this analysis alongside professional financial advice. Whether you are a beginner or experienced professional, this free online tool provides instant, reliable results without manual computation. By automating the calculation, you save time and reduce the risk of costly errors in your planning and decision-making process.
LTC insurance premiums are substantial and not guaranteed — rates can increase significantly. For high-net-worth individuals, self-insuring may be more efficient: your money grows tax-deferred (in the right accounts), you keep full control, and if you never need care, the funds remain in your estate. This calculator quantifies whether your savings plan can realistically cover projected LTC costs.
Future Care Cost = Annual Cost × (1 + Care Inflation)^(Years Until Need) Total Care Need = Σ [Future Care Cost × (1 + Care Inflation)^year] for each year of care Fund at Need = (Current Savings + Annual Contribution × annuity factor) × (1 + Return)^Years Funding Gap = Total Care Need − Fund at Need
Result: $491,370 fund at care age vs. $756,230 needed — $264,860 gap
$50,000 starting balance + $8,000/year contributed for 20 years at 6% return grows to approximately $491,370. Projected 3-year care cost at 4% inflation over 20 years is approximately $756,230. The $264,860 gap suggests either higher contributions, longer time horizon, or supplemental LTC insurance.
Self-insuring works best when you have significant financial resources, a long time horizon, and the discipline to maintain a dedicated fund. It fails when assets are insufficient, the timeline is short, or the funds get diverted to other purposes. Honest self-assessment of your financial behavior is as important as the math.
Start with an HSA if eligible — it's the most tax-efficient vehicle for LTC savings. After maximizing HSA contributions ($4,300 individual / $8,550 family in 2025), use a dedicated brokerage account invested in a balanced or target-date fund. The key is earmarking these funds and treating contributions as non-negotiable.
If your self-insurance fund falls significantly behind the projected care cost target at any point, consider adding a basic LTC policy or hybrid life/LTC policy to cover the gap. Annual reassessment ensures you don't arrive at care age with an inadequate fund and no insurance.
Self-insuring makes the most sense for individuals with $1 million+ in liquid assets (excluding home equity), strong financial discipline, a long savings runway (15-25+ years), and the ability to absorb worst-case costs without jeopardizing their spouse's retirement. It's also appropriate if you can't qualify for LTC insurance due to health history.
The primary risks are: needing care earlier than expected (less time for savings to grow), needing care for longer than planned (the 20% who need 5+ years), care costs rising faster than your investments, and poor investment returns. You also face the risk of spending the fund on other needs before care is needed.
A reasonable target is 3-5 years of projected care costs at the time you'll need care. For someone 20 years from needing care with 4% inflation, current costs of $108,000/year would grow to $237,000/year — requiring $710,000-$1.2 million for 3-5 years of coverage.
Health Savings Accounts (HSAs) offer the best tax benefits for this purpose: tax-deductible contributions, tax-free growth, and tax-free withdrawals for medical expenses (including LTC). After that, Roth IRAs, brokerage accounts in balanced funds, and fixed-indexed annuities are common vehicles.
Absolutely. A popular hybrid strategy is to purchase a short-benefit-period LTC policy (2-3 years) at lower premiums while building a self-insurance fund. The insurance covers initial care years, giving your fund more time to grow and covering the most likely scenario (average need of 2.5 years).
That's the best-case scenario. Your LTC fund becomes part of your estate or additional retirement income. Unlike LTC insurance premiums, nothing is "lost." This is the primary advantage of self-insuring — the money is always yours.