The Caregiving Conundrum: How Unpaid Caregiving Affects Retirement Readiness

Unpaid caregivers serve a vital function in taking care of a family member or close relative, but new research published by the Employee Benefit Research Institute (EBRI) finds that it can take a toll on retirement preparedness.  

Based on findings from the 33rd annual Retirement Confidence Survey (RCS) conducted jointly by EBRI and Greenwald Research, the report finds that caregivers are more likely to have lower levels of assets and more likely to have problems with debt than non-caregivers. 

According to the research, a quarter of caregivers have less than $1,000 in savings and investments compared with 15% of non-caregivers. At the same time, caregivers are less likely to say that debt is not a problem—at 36% compared with 48% among non-caregivers.

What’s more, 55% of caregiving workers and 37% of caregiving retirees report that they provide financial support to their caregiving recipient. Over a third of worker caregivers (35%) and retiree caregivers (37%) say they provided between $5,000-$14,999 in financial support to their caregiving recipient in the past 12 months.

With these tolls on caregivers, they are also less likely to have saved for retirement and are more likely to have retired earlier than planned for reasons out of their control, which can reduce the lifestyle of caregivers in retirement, the study notes. 

Caregivers in the study are defined as those who provided unpaid care for an adult and/or child within the last 12 months in a non-institutional setting and helped their care recipient with at least one activity of daily living (ADL) or instrumental activity of daily living (IADL).

“Caregivers can take on many roles and responsibilities when taking on the care of a relative or friend. Unfortunately, what we found is that caregiver retirees are more likely than non-caregivers to say that their overall lifestyle in retirement is worse than they expected it to be before they retired,” notes EBRI Wealth Benefits Research Director Craig Copeland. 

Additional key findings in the 2023 RCS caregivers report include:

• Caregivers are less likely to say that their health status is “excellent or very good,” are more likely to be female, are less likely to be white, and are more likely to be Hispanic than non-caregivers. The share of caregivers who say that their health status is excellent or very good is 49%, compared with 55% among non-caregivers. Sixty-one percent of caregivers are female vs. 49% of non-caregivers.
• Caregiver retirees are more likely to say that their overall lifestyle in retirement now, compared with how they expected it to be before they retired, is worse than non-caregiver retirees. Specifically, 31% of caregiver retirees say it is worse, as opposed to 20% of non-caregiver retirees.
• Caregivers in many instances have less confidence in their finances than non-caregivers. However, when it comes to preparing for retirement, EBRI found that caregivers are just as likely as non-caregivers to have done various retirement preparation tasks. This includes trying to figure out how much money they need to save so they can live comfortably in retirement; thinking about how much money to withdraw from their retirement savings and investments in retirement; and planning for how they would cover an emergency or big expense in retirement.
• The distributions of the ages at which both caregivers and non-caregivers retired are not different. In addition, the likelihoods of retirees having retired earlier, later, or when planned are also not different between caregivers and non-caregivers. However, the top reason caregivers were most likely to have retired earlier than planned was having to care for a spouse or another family member, whereas non-caregivers’ top reason was that they could afford to retire earlier than planned. 

“Unpaid caregivers assist with ADLs and IADLs, but they also provide financial support. More than half of working caregivers provide financial support to their care recipient, and these results would suggest that it’s often to the detriment of their own financial health,” observes Lisa Greenwald, CEO, Greenwald Research.

The 2023 research is based on a survey of 2,537 Americans conducted online from Jan. 5–Feb. 2, 2023. All respondents were ages 25 or older. The survey included 1,320 workers and 1,217 retirees and this year included an oversample of roughly 944 completed surveys among caregivers (598 workers and 346 retirees).

The RCS report focusing on caregivers can be viewed by visiting: www.ebri.org/rcs-caregivers.