Monte Carlo Simulation
10,000 wealth trajectory simulations varying LTC onset age, duration, care intensity, returns, and inflation.
Monte Carlo Wealth Simulation
For each strategy, we run 10,000 simulations varying six key parameters: age at LTC onset (Markov-derived), duration of need, care intensity level, investment returns (normally distributed around user's expected return), care cost inflation (3-5% range), and LTCI rate increases (for buy strategy).
- Expected (mean) cost -- the average lifetime LTC cost across all scenarios
- Worst-case (P95) -- the 95th percentile cost for planning purposes
- Ruin probability -- the percentage of scenarios where assets reach zero
- Breakeven age -- the age at which buying LTCI becomes cheaper than self-insuring