Can taking time off from the workforce to become a caregiver destroy one’s chances at a comfortable retirement?
For Susan Freeman, 72, the answer is yes. Although Freeman does not regret her decision to care for her mother, it destroyed her desire for financial independence (1).
Before helping her mother full time, Suzanne Freeman worked in various industries such as banking, insurance, and food service (including her pizzeria). As her mother’s needs increased after the stroke, Freeman had to sell the pizzeria, and she lived largely on Social Security disability checks and her husband’s income.
In addition to the financial strain, the arrangement led to a temporary separation, with Freeman’s husband staying with their daughter.
Freeman’s mother finally moved into a nursing home in 2015 and passed away in 2019, but that period changed her financial future forever. At 72, she still works four days a week at the family-owned uniform shop with limited savings to fund her retirement.
Despite the financial difficulties, she says she is proud that she took care of her mother and that she “felt an obligation to help.” But she also admitted, “Instead of always putting my family first, I should have thought more about myself. I had a lot of responsibilities. I gave up a lot (1).
Here’s why caring for loved ones—as work is essential—can be a serious financial risk, especially for those nearing retirement. Before leaving the workforce to become a full-time caregiver, consider the financial pros and cons and how you can protect your retirement plan to make sure you take care of yourself in your old age.
The rise in longevity makes decisions about long-term care a tough reality for many Americans like Freeman. According to a recent survey by Edward Jones, two out of five adults in the United States already identify as a caregiver, and this is expected to increase to 46% in the future (2).
AARP’s Caregiving in the United States 2025 report found that 63 million Americans are now involved in caregiving, a 50% increase from a decade ago (3).
In addition to the extensive emotional impact, these surveys show that significant financial difficulties are being faced.
Edward Jones research shows that 95% of caregivers are worried about their retirement security, and half said they should cut back on their personal spending. Like Freeman, 25% of respondents quit their jobs, while another 24% took fewer hours, and 16% used their retirement savings to help with caregiving costs (2).
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Although the average cost of long-term care varies by need, location and the latest inflation rate, the federal Long-Term Insurance Program estimates that annual home care costs are $51,480, while assisted living costs are $66,132, and semi-private room costs are $112,420 (4).
AARP reports that family caregivers currently spend about $7,200 out of pocket to cover these high costs (5).
Over the long term, the Urban Institute estimates that women who provide unpaid caregiving have an average lifetime income of about $295,000 (which includes lost wages and reduced retirement benefits). In addition to lost cash flow, this lower income often translates into smaller Social Security benefits and poorer retirement security down the line (6).
No one can prepare for the shock of a health emergency, but reviewing the actual costs of care today can help families avoid making hasty decisions that could harm their financial future. This includes paid home care, assisted living and professional help.
For guidance, consider partnering with a financial planner or benefits specialist who can help you understand your current financial options and eligibility for assistance through Medicaid, veterans benefits, long-term care insurance, or government care programs that can cover costs.
For example, in many states, Medicaid home and community-based services waivers help eligible seniors receive care at home and sometimes pay for family members as paid caregivers through self-directed care options (7).
Also note that the National Family Caregiver Support Program provides grants to states to assist family caregivers with services such as counseling, training, and respite care (8). Caregivers can also take advantage of the federal Family and Medical Leave Act and state-sponsored paid family and medical leave programs that can help them receive assistance while keeping their jobs (9).
Tax benefits for caregivers, including deducting medical expenses on Schedule A (10) and claiming the parents as dependents, can help reduce the annual financial burden (11).
For those who are seriously considering leaving the workforce, remember that when you leave the workforce, you’re not just paying your salary. You eliminate many safety nets you’ll need later in life, including employer-sponsored retirement contributions and health insurance. To reduce this risk, look into paid leave policies, remote work options, or caregiving accommodations before resigning. A short vacation or reduced schedule can save your cash flow and your financial future.
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Business Insider (1); Edward Jones (2); AARP (3); Federal Long Term Insurance Program (4); AARP (5); Urban Institute (6); Medicaid (7); Community Life Administration (8); Faculty of Labor (9); IRS (10), (11)
This article provides information only and should not be used as advice. It is provided without warranty of any kind.
