Guides › Long-Term Care Planning
Updated July 31, 2026. Quick answer: self-funding care is a withdrawal-order problem. A care year is usually a year of enormous deductible medical expenses, which can absorb the tax on money coming out of IRAs and 401(k)s — so the standard “taxable first” habit is often exactly backwards once care begins. The plan is: know the number, park it where it survives, and know which account pays first.
The number
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.
Your personal version — projected forward at care inflation and discounted at your return — is the ring-fence pot from the breakeven calculator.
Which account pays
Care costs that qualify as medical expenses are deductible above the AGI floor once you itemize — and a $120,000 care year clears that floor many times over. Those deductions can offset the ordinary income of tax-deferred withdrawals in the same year, which can make the care years the cheapest years of your life to drain an IRA. That inverts the default order most self-funders run. The mechanics, worked properly: the withdrawal order calculator and withdrawal order in a low-income year.
Where the pot lives
A ring-fence that is 100% equities in the year care begins is not a ring-fence. Money with a known job and an unknown start date wants a ladder or short-duration allocation for the near tranche and growth only for the tail tranche. And it should be titled and documented so a spouse or executor can find and use it — care decisions are usually made by someone else, under time pressure.
The two exits people back into
Home equity funds a large share of American care by default — workable, but it works best decided in advance rather than in a crisis sale. And Medicaid is the payer of last resort with a five-year lookback on transfers; late-stage giveaways mostly do not work. How that interacts with conversions: Roth conversions and the Medicaid horizon.
A plan on a page beats a plan in your head.
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If the private-pay plan runs out, Medicaid is the backstop — and its two clocks reward planning done five years early: the look-back penalty formula and what estate recovery can reach in your state.