Why Caregiving Can Change How Secure Your Retirement Really Feels

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Even if you’ve regularly contributed to your retirement accounts and your projection software says you’re on track, caregiving can completely throw your finances off track. 

Over 63 million Americans provide unpaid care to a loved one, according to a report by AARP and the National Alliance for Caregiving (NAC). Plus, the CDC reports that about 1 in 5 U.S. adults (21%) are caregivers.

For many, caregiving duties coincide during their peak earning years or after they’ve already retired. In either case, it can change how secure you feel during retirement.

When Caregiving Collides With Your Paycheck

Caregiving is not emotionally draining. It can affect your income. The same AARP report showed that 7 in 10 caregivers are employed, juggling work alongside care responsibilities. Caregivers spend an average of 27.3 hours, with 24% providing care 40 hours or more.

This kind of time commitment can mean you may be forced to take unpaid leave, reduced work hours or even early retirement. Less income could mean less in 401(k) contributions and maybe smaller Social Security benefits. 

Sadly, the financial impact can compound over time, as even a short pause in or lower retirement contributions can lower your portfolio growth over time.

Long-Term Care Costs Are Expensive 

Even if you feel like you’ve got a handle on caregiving and balancing your career, the cost of care itself catches you off guard financially.

The U.S. Department of Health and Human Services estimated that 70% of adults turning 65 will need long-term care services. The prices are pretty steep. 

According to the 2024 Genworth and CareScout Release Cost of Care Survey, the median annual cost for a private nursing home room is $127,750 for a private nursing home room and $77,792 for a home health aide. 

These expenses, especially if the person you’re caring for can’t afford it, could mean you’re on the hook for them. As in, you may be forced to tap into your emergency savings, withdraw from retirement accounts or contribute less to them. 

Families Are Absorbing the Financial Burden

Analysis by the National Partnership for Women & Families (NPWF) in 2024 found that unpaid caregiving’s estimated economic value was equivalent to over $1 trillion. This staggering amount reflects how much of the costs families are absorbing.

That’s not to say caregiving can automatically derail your retirement. It is a factor that can make your retirement plans more unpredictable. You can do your best to mitigate this risk and have a conversation with your loved ones about what might happen if they’re in need of caregiving in the future. 

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