Guides › Long-Term Care Planning
Updated July 31, 2026. Quick answer: whether you can skip long-term care insurance is a number, not a feeling: the pot you would need to ring-fence today to cover your own care, versus what the premiums would grow to if you invested them instead. At the 2025 median cost of assisted living ($6,200/month) and 4% care inflation, a 55-year-old planning for three years of care at 82 is pricing a bill that has nearly tripled by the time it arrives. This calculator computes both paths on your numbers.
What care actually costs (2025 survey medians)
- $129,575/year ($355/day) — nursing home, private room; semi-private $114,975.
- $74,400/year ($6,200/month) — assisted living.
- $80,080/year — in-home care at the $35/hour median, 44 hours/week.
Source: CareScout 2025 Cost of Care Survey (25,000+ provider rates collected July–November 2025, published by Genworth). These are national medians — metro areas run materially higher — and they are the defaults in the calculator below, editable to your area.
The calculator
How to read the result
The comparison above is deliberately fair to self-insuring: it credits you the full investment growth on every premium dollar you did not pay. Even so, two things tilt real decisions. First, the average stay is not the risk you are insuring. A two-to-three-year stay is survivable arithmetic for most people with meaningful assets; the five-plus-year dementia tail is what destroys estates, and that tail is exactly where a benefit pool with an inflation rider earns its premiums many times over. Second, self-insuring only works if the pot actually exists. A number on this screen is not a ring-fenced account; money earmarked casually tends to be spent, gifted, or riding the market at the moment it is needed.
The middle path is sizing: insure the tail, self-fund the front. A policy with a long elimination period and a growing pool costs far less than first-dollar coverage, and your ring-fence only has to carry you to the policy.
Related decisions: what coverage costs at each age · who can genuinely self-insure · buying at 55 vs 65 · hybrid vs traditional policies · the self-funder’s playbook.
You just priced the risk. An adviser prices it inside your whole plan.
The ring-fence number above competes with everything else your portfolio must do — income, taxes, inheritance. The matching service below introduces you to advisers who pay to meet you. Bring the number and ask how they would fund it.
Before you start, what actually happens. The form is run by Kapitalwise, our advisor-matching partner. It asks about nine questions — age, investable assets, location — then your name, email and phone number, and verifies the phone by text.
Kapitalwise sends your details to advisers who pay for the introduction, so expect calls and texts. Clear Money Guide is paid when you submit the form, whether or not you ever hire anyone. Nothing loads and nothing reaches Kapitalwise until you press the button.
Compare fees, scope, conflicts, credentials and fiduciary duty before you hire anyone.
The Kapitalwise form opens here — you stay on this page.
The number that surprises people who bought a long time ago
Downsizing is the one home sale where the gain is usually large and the exclusion usually still covers it. A couple who bought in 1994 for $180,000 and sell at $760,000 with $46,000 of selling costs have a realized gain of about $534,000 before improvements. That is above the $500,000 joint cap — but decades of capital improvements are exactly what brings it back under, and most sellers have never added them up.
Improvements are the lever, and the records are the constraint
A new roof, an addition, a replaced HVAC system, new windows, a finished basement: these add to basis. Repainting and repairs do not. Thirty years of improvements on a family home routinely total six figures, and every dollar of it reduces the gain dollar for dollar. The practical problem is documentary, not legal — the seller who kept receipts pays less than the identical seller who did not.
Why downsizers should check the net investment income tax separately
A retiree with modest ordinary income can still be pushed over the 3.8 percent NIIT threshold by the sale itself, because taxable gain is net investment income. The thresholds are $250,000 on a joint return and $200,000 otherwise, written into Section 1411(b) as fixed figures with no indexing. A sale that produces $120,000 of taxable gain on top of $180,000 of other income crosses the joint threshold and picks up 3.8 percent on the part above it.
The move itself may change the tax
Downsizing usually means moving, and sometimes across a state line. Some states tax the gain the federal exclusion just removed. If the sale and the move are in the same year, the order of the two matters, and it is worth checking the destination state before signing.
Related
Methodology
- Exclusion caps, the 2-of-5 test, the nonqualified-use allocation, the reduced-exclusion fraction and the depreciation carve-out are taken from the text of 26 U.S.C. 121. The 3.8 percent rate and its thresholds are from 26 U.S.C. 1411. Both were read on 2026-07-30.
- Section 121 caps and Section 1411 thresholds are written in the statute as fixed dollar amounts with no indexing mechanism, so they are built in. Long-term capital gain brackets ARE indexed annually, so your rate is an input rather than a lookup.
- Figures were computed by two independently written engines that agree to the cent, and the calculator on this page reproduces both exactly.
- Federal only. State treatment varies and some states do not follow the federal exclusion.
Educational estimate, not tax advice, and not a filed return. Federal only. Confirm anything that changes a filing decision with a CPA or tax attorney.
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