LTC Expense Spend Down

Self-insuring can have a dramatic impact on your retirement plans.  If you are relying on the income from your investments to supplement your lifestyle during retirement, paying for long-term care can quickly erode your ability to generate income from your investments. 

Long Term Care Expense Spend Down

Year

Assets at Start of Year

Investment Yield 5 %

Living Expenses

LTC Expenses

Assets at End of Year

1 $500,000 $25,000 $75,000 $100,000 $400,000
2 $400,000 $20,000 $75,000 $105,000 $290,000
3 $290,000 $14,500 $75,000 $110,000 $169,500
4 $169,500 $8,475 $75,000 $115,500 $37,475
5 $37,475 $1,874 $75,000 $121,275 ($106,926)

 

Assumes a retirement steam of income $50,000 a year to cover living expenses, which comes from Social Security and or a Pension