The $600 Billion Dilemma: How to Help Family Caregivers

The economic impact of unpaid family caregiving is $600 billion per year — a necessary service for families but financially draining for the caregiver. Here's why that is and how to help.

Older woman with caregiver
A young woman holds the hands of an older woman in a caregiving situation.
(Image credit: Getty Images)

No one is immune to the sands of time. While you’d never make your loved one feel like a burden for needing care and support, family caregiving still requires significant physical, financial, and emotional commitment. According to a recently released TIAA Institute report, over 53 million Americans currently provide uncompensated caregiving for their families. Most of this uncompensated labor is provided by women, people of color, and Millennials. 

An AARP report from 2023 showed that the estimated economic value of uncompensated family caregiving was $600 billion in 2021, up from $470 billion in the previous study in 2017.

What is the financial impact of caregiving on family members and what are ways to limit that impact?

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Who bears the biggest burden of caregiving?

Caregiving often requires time away from work, added financial stress, and an extra 24 hours' worth of caregiving labor each week for multiple years. In conjunction with a history rooted in complex gender and racial dynamics, women and people of color are often expected to take on caregiving roles within their families. However, they often experience negative consequences for their careers and finances by taking on this obligation. 

The majority of caregivers identified in the study were women, who comprised 60% of the demographic. Another quarter of those women were sandwiched between caring for children and older parents.

As people live longer and choose to have children later in life, caregiving is increasingly placed on younger generations. TIAA’s report reveals Millennials (in their late twenties and thirties) are now 25% of all caregivers. This could be particularly detrimental as this life stage is usually associated with career advancement, increasing your income, and building savings. 

Caring for family members often goes beyond the physical and emotional commitment as 90% of caretakers contribute some form of financial support. On average, caregivers reported spending 26% of their incomes on activities including:

  •  Housing 
  •  Home modifications 
  •  Medical expenses 
  •  Transportation 

Caregiving and the racial earnings gap

For Black and Hispanic/Latino households, these costs demanded a larger chunk of their incomes. Black families dedicated 34% of their incomes to caregiving while Latino households dedicated almost half of their incomes (47%). The disparity could be heavily influenced by the racial earnings gap, which currently shows Black and Hispanic people earning 76 cents and 73 cents per dollar respectively as recorded by the Department of Labor. So despite earning less, these groups take on an increased financial responsibility with caregiving.  

What is the financial impact of caregiving?

Almost half of caregivers report at least one financial side effect of this responsibility. 

  • Approximately one in five pull from their personal savings to cover expenses 
  • 12% cash out money from their long-term savings and retirement accounts
  • 28% have stopped saving completely 
  • 23% have to take on debt
  • 19% have resorted to paying bills late or not paying bills at all

How caregiving impacts employment for working caregivers

When caring for an elderly parent, spouse with health issues, or a disabled child, it’s often necessary to step away from work duties to prioritize their care. 61% of caregivers reported work-related consequences such as:

  • Arriving late 
  • Leaving early 
  • Taking time off  

The time commitment of caregiving on average adds 24 hours per week to the caregiver’s workload and they typically spend 4.5 years performing these duties. A long-term caregiving commitment is bound to stretch into one’s work life. One study even estimated an employer productivity loss of $5,600 per caregiving employee annually. 

When the need for involved care becomes apparent, about 10% of working caretakers feel the need to retire early or completely exit the workforce. While this decision undeniably impacts their lifetime earnings potential and ability to save for their own retirement, the alternative is hiring costly caregiving services.

In a 2022 report from the National Council On Aging (NCOA), the typical cost of professional caregiving services was estimated to exceed 30% of a family’s income. TIAA also reported caretakers experiencing an average of $7,200 annually in out-of-pocket expenses. 

What steps can you take to help relieve the financial burden of caregiving? 

While there are plenty of impacts associated with caregiving for relatives, there are also steps you can take to confront those financial issues head-on. 

  • Involve a financial advisor. Speaking with a financial advisor can help you plan through the financial obligations of caregiving. Get a true understanding of how leaving the workforce, pulling from savings, and dedicating a portion of your income impact your financial situation. 
  • Prepare for a longer lifespan. Since 1935, lifespans have increased by 17 years from an average of 62 years old to 79 years. Learning more about life expectancy and how it could make your retirement planning more effective could help you avoid outliving your money and provide a more accurate savings goal, which could help cover caregiving costs. 
  • Seek out employer benefits. Assess your employer's caregiving benefits and determine how well they could help meet your needs. Make use of caregiver resource groups or employee networks to help find balance and community. 

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Seychelle Thomas
Contributing Writer

Seychelle is a seasoned financial professional turned personal finance writer. She’s passionate about empowering people to make smart financial decisions by combining 10 years of finance industry experience with solid research and a wealth of knowledge. Seychelle is also a Nav-certified credit and lending expert who has explored money topics such as debt consolidation, budgeting, credit, and lending in her work for publications including GOBankingRates, LendEDU, and Credible.