Caregiving crisis drains retirement savings as 63 million Americans provide unpaid care

A new study by the Employee Benefit Research Institute (EBRI), supported by data from AARP, reveals that 63 million Americans provide unpaid care, a significant increase from 53 million in 2020. This figure now represents nearly one in four adults, underscoring the scale of informal care provision across the United States. The research highlights caregiving as a critical determinant of retirement security, with many caregivers reporting that their actual post-retirement lifestyle differs significantly from their initial expectations.

Caregivers face substantial financial strain, including lower retirement confidence, higher debt levels, and reduced savings, with many forced to retire earlier than planned or reduce their working hours. More than 60 per cent of caregivers are balancing these responsibilities while still employed, with half reporting they have reduced hours, taken unpaid leave, or quit their jobs entirely. The three primary reasons for early workforce exit are personal health, job loss, and caregiving for a family member; caregivers are more likely to leave due to responsibilities, whereas non-caregivers often exit via early retirement packages.

Women are disproportionately affected by these financial pressures, as they tend to live longer and often save less due to caregiving responsibilities. Over 60 per cent of caregivers are female, a demographic that faces heightened retirement insecurity due to longer life expectancy and lower accumulated savings. Cindy Hounsell, founder of the Women's Institute for a Secure Retirement, noted that the impact of caregiving on top of existing hurdles makes it unlikely for many women to recover financially in this situation.

A third of caregivers reported having less than $10,000 in savings and investments. They are also more likely than non-caregivers to struggle with debt, mental health strain, and lower confidence about their long-term financial future. Craig Copeland, director of wealth benefits research at EBRI, emphasised that caregiving often takes time away from work, preventing the accumulation of savings and putting retirees at a disadvantage when their finances are finally assessed.

The personal toll is illustrated by the experience of Brian and Rose Armstrong, a retired couple from New Jersey who have been full-time caregivers for their grandson for the past decade. The couple, who retired two years ago, found their dreams of travel or property investment replaced by the costs of food, clothing, and medical care. While they remain on track to fund their golden years through Social Security and pensions, their situation reflects a broader trend where many caregivers take on new debt with little financial preparation for the transition.