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Caregiving Can Cost Workers $120,500 in Lifetime Income
New AARP report finds caregiving can lead to lost wages, lower retirement savings and less Social Security income
6-minute read
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Key takeaways
- AARP estimates that working caregivers born anywhere from 1981 to 1985 collectively forgo $2.3 trillion in lifetime earnings, workplace retirement income and Social Security benefits.
- Caregivers who lose the equivalent of more than 2½ years of full-time work face average lifetime losses approaching $450,000.
- Paid leave, flexible schedules and caregiver tax credits can ease financial pressures and help caregivers stay employed.
A missed shift to take your mom to a doctor’s appointment. Switching to part-time work because your spouse needs help with daily activities. An early retirement when juggling a job and caring for a loved one becomes overwhelming.
For family caregivers, these decisions often reflect the day-to-day challenges of caring for family members or friends. But the financial consequences can continue long into retirement and after caregiving ends.
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A new AARP report, “The Hidden Cost of Caregiving: Lost Earnings, Retirement Income, and Social Security Income,” estimates that working caregivers lose an average of $120,500 in lifetime income because caregiving reduces their time in paid work. Most of that loss comes from earnings. But smaller contributions to workplace retirement plans, lost employer contributions and reduced Social Security benefits can leave caregivers with a smaller nest egg for their retirement.
“The financial sacrifice doesn’t end when caregiving ends,” says Selena Caldera, senior strategic policy advisor at AARP’s Public Policy Institute and a coauthor of the first-time report. “Reduced income today can mean less retirement savings and lower Social Security benefits for years to come.”
Smaller paychecks are only the beginning
The financial costs of caregiving often bring to mind bills: home care, medical supplies, transportation or modifications that make a person’s home safer. The new report examines another cost: income caregivers give up when they cut back on work or leave a job.
Researchers used the Urban Institute’s Dynamic Simulation of Income Model to compare projected lifetime financial outcomes with and without caregiving-related work reductions. The analysis focuses on people born in 1981 up through 1985, who turn 41 to 45 in 2026.
The lifetime loss in income due to caregiving amounts to $120,500 for the typical working caregiver. This breaks down to $105,100 in earnings, $7,300 in income from employment-based retirement plans and $8,100 in Social Security income.
The report cites findings from “Caregiving in the US 2025” by AARP and the National Alliance for Caregiving that showed more than half of working caregivers reported arriving late, leaving early or taking time off because of caregiving. Almost 1 in 5 moved from full-time to part-time work, and nearly 1 in 10 gave up work entirely.
Moving to part-time work may make caregiving manageable, but it can also mean losing access to employee-sponsored health care insurance and retirement benefits like 401(k)s.
As her mother’s care needs grow, Jodi O’Donnell-Ames, 60, of Titusville, New Jersey, works part-time, sacrificing wages and benefits while drawing on savings to cover expenses.
Her mother, Catherine DeMarco, 93, has diabetes, high blood pressure and mobility problems complicated by osteoporosis and lingering pain from a serious car accident. She stopped driving this year and struggles to get around her apartment.
Each week, O’Donnell-Ames drives roughly two hours each way to her mother’s home in Ocean City, New Jersey, to help her shower and manage other personal care needs. She also coordinates medical appointments and handles Medicare and insurance issues.
With less income from work, O’Donnell-Ames and her husband, Warren Ames, 70, who is retired, withdraw $5,000 to $7,000 from savings each month to cover costs.
“Working part-time gives me the flexibility to care for my mom, but that flexibility comes at a price, with less income now and less money set aside for later,” says O’Donnell-Ames.
Retirement savings you never get to build
When earnings fall, caregivers may have less money available for retirement contributions. Those who leave a job may stop contributing to a workplace 401(k) plan altogether.
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Employer contributions can disappear too. A caregiver who loses access to a retirement plan may also lose matching dollars that would have helped build savings for the future.
Caregiving can also affect a benefit many workers expect to rely on later: Social Security.
Retirement benefits are based on a worker’s highest 35 years of earnings, adjusted for wage growth. If someone has fewer than 35 years of earnings, the calculation includes zeros. Even workers with 35 years can miss opportunities to replace lower-earning years with higher-earning ones when they leave employment.
The report illustrates this with two hypothetical women who each earn $50,000 annually in wage-adjusted earnings. One works for 35 years; the other works for 25 because of caregiving. In that example, the caregiver’s monthly benefit at full retirement age is about $381 lower, a reduction of roughly 20 percent.
More years of care mean greater losses
Caregiving may last a few months, span a decade or recur as different relatives need help. The research finds especially large losses among people whose responsibilities substantially reduce paid work.
Caregivers who lose more than 5,000 work hours over their lifetimes — approximately 2½ years of full-time work — experience average lifetime income losses of about $446,000.
Those providing care for 10 years or more face average losses approaching $175,000. Those years can include separate periods of caregiving, rather than one continuous stretch.
“The findings underscore why families need to consider the longer financial picture when discussing care arrangements,” says Caldera. “Exploring workplace support may help preserve a caregiver’s ability to earn and save.”
What AARP is doing to help
For working caregivers, a useful starting point is understanding available benefits before changing hours or leaving a job. Employer policies may include flexible scheduling, hybrid work, caregiver leave or help finding community resources.
AARP’s report identifies paid leave and workplace flexibility as ways to help caregivers remain employed while meeting family responsibilities. AARP has also advocated for expanding access to paid family and medical leave, including supporting federal tax incentives that encourage employers to offer it.
Financial relief is another priority. AARP is pressing Congress to pass the bipartisan Lowering Costs for Caregivers Act, which would expand the use of certain pretax health accounts for parents’ and parents-in-law’s qualified medical expenses. It also supports the Credit for Caring Act, which would provide eligible working family caregivers with an annual, nonrefundable federal tax credit of up to $5,000.
At the state level, AARP has pushed for caregiver tax credits and other kinds of financial support. These measures address expenses rather than replacing lost wages, but they can help relieve pressure on household budgets. “The purpose of that relief is to help caregivers protect their own financial security,” says Caldera.
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Here’s how you can help:
- Tell Congress to put money back into the pockets of family caregivers.
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- Find out more about how we’re fighting for you every day in Congress and across the country.
- AARP is your fierce defender on the issues that matter to people 50-plus. Become a member or renew your membership today.
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