How Caregiving Can Wipe Out $1 Trillion of Unpaid Retirement Security

Why Unpaid Caregiving Is a Retirement Risk

The nation's $1.01 trillion caregiving system is mostly unpaid, and that is what makes it a blind spot for retirement planning.

Many retirees plan for market volatility first. For many households, though, the more immediate threat is simpler: when a loved one needs care, the cost can show up quickly in lost wages, more borrowing, or a smaller nest egg. This is no longer a niche problem. Family caregivers now number 63 million Americans, or about 1 in 4 adults, which makes the risk relevant to everyday retirement planning.

Caregiving often shifts the cost into retirement plans

The core choice is not whether caregiving matters. It is whether a family pays for care now or lets retirement pay for it later.

The scale is already large. 59 million family caregivers support adults, providing 49.5 billion hours of care in 2024. That work helps many older adults remain at home, but its economic value does not become a paycheck for the family. When care needs rise, households often face the same trade repeatedly: pay for help today, or reduce the future income stream meant for retirement.

How Unpaid Care Turns Into Financial Damage

The retirement hit rarely arrives all at once. More often, it shows up through three linked mechanisms: lost earnings, rising care costs, and thin household balance sheets.

Lost earnings hit retirement savings before the bill does

The first damage is not a care invoice. It is time taken out of work.

Family caregivers provided 49.5 billion hours of care in 2024, equal to the work of 23.8 million full-time workers. For households, that often means missed overtime, fewer hours, slower advancement, or, in heavier cases, leaving work altogether. Once those earnings are gone, the retirement squeeze becomes real: less cash available now, lower lifetime earnings, and less money saved for retirement.

Rising care costs are outrunning older-household income

The second mechanism is straightforward: care costs are rising faster than the income of many older households.

From 2019 to 2024, home care and assisted living costs rose nearly 50 percent, while household income for those 65 and older grew 22 percent over the same period. In more recent data, home care costs have jumped 7.9 percent from May 2025 to May 2026, versus a 4.6 percent increase for nursing home costs. Retirement plans usually rely on fairly stable assumptions, so when care costs rise faster than income, portfolios are asked to do more work than expected.

Thin balance sheets mean harder choices

The third mechanism is that many households do not have much cash cushion to start with.

When care is needed, families often make the same difficult trade again: pay for help, cut retirement spending, or borrow.

Consider a middle-income family in its late sixties. When one parent needs more help at home, the adult daughter may cut work hours to manage medications, appointments, and safety checks. That shifts part of the cost onto her workplace implications and wages, while the grandparents may start drawing on savings. The care problem is not solved; it is moved across the household balance sheet until it starts pressing on retirement.

Why the "Noble Work" Narrative Can Mask the Financial Hit

Family caregiving clearly keeps millions of older adults out of institutions and eases pressure on public programs. The work provided by 59 million family caregivers would be worth $1.01 trillion per year if paid at market rates. That is why unpaid care is widely respected. But respect is not the same as affordability.

"Unpaid" does not mean costless

One side of the debate emphasizes that family care can be a cheaper alternative to formal care. The other side notes that "unpaid" is an accounting term, not a financial one. The cost still has to come from somewhere, and too often it comes from the household with the weakest cushion.

That is where the retirement stress test begins. In a recent survey, 56% said they would borrow from retirement accounts to fund a loved one's care. A move that helps a family in the moment can still be expensive for the retirement plan because withdrawing money early often means less compounding later, plus possible taxes and penalties.

The retirement hit is not shared equally

The financial burden of caregiving is not spread evenly. AARP says one in three caregivers is under age 50, and women disproportionately carry the caregiving load. The strain also falls harder on lower-income households and on 18 million hourly wage workers who often have less access to supportive workplace benefits.

That matters because these are often the households with the smallest cash cushions and the least flexibility. When care needs arrive there, the consequences can show up quickly: borrowing, part-time work, debt, and a retirement target that moves further away.