At How Much Can I Afford to Spend in Retirement? we encourage retired households to periodically compare the present value of their retirement assets with the present value of their spending liabilities to determine their Funded Status. Unlike other approaches that frequently ignore long-term care costs or assume that these costs will be met through insurance or from other assets, our approach encourages users to estimate the present value of these future uninsured expense liabilities just like any other retirement expense.
Developing and maintaining a robust financial plan in retirement is a classic actuarial problem involving the time-value of money and life contingencies. This problem is easily solved with basic actuarial principles, including periodic comparisons of household assets and spending liabilities.