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Cost of Caregiving (1)

Oct 02, 2025

The Invisible Costs of Caregiving

author avatar

Lori Gann Morris, CIMA®, AIF®, CeFT®, Co-Founder / Managing Partner

Over 53 million Americans provide unpaid care for adult family members or friends, according to a study conducted by the National Alliance for Caregiving and AARP. That's one in five adults stepping into roles they never planned for, often during their peak earning years. While we celebrate their compassion and dedication, these caregivers can also face profound and unexpected financial challenges.

What looks like a temporary adjustment to help a loved one can fundamentally alter your income, retirement timeline, and long-term financial security. The costs go far beyond the obvious expenses of medications, medical equipment, or home modifications.

The Hidden Financial Toll

Caregiving affects your finances in ways that extend far beyond the obvious out-of-pocket expenses. The most significant cost is often the opportunity cost of lost earnings and career advancement.

Research from the Urban Institute found that women who take time off for caregiving responsibilities face a 15% reduction in lifetime earnings, with the estimated employment-related costs for mothers providing unpaid care averaging $295,000 over a lifetime.

Many caregivers find themselves:

  • Passing up promotions or leadership opportunities that require travel or extended hours
  • Depleting emergency funds to cover care-related expenses
  • Reducing or stopping retirement plan contributions during caregiving years
  • Using credit cards or loans to bridge income gaps
  • Delaying major financial goals like home purchases or debt payoff

Women bear a disproportionate share of this burden. The Bureau of Labor Statistics reports that 59% of eldercare providers are women. This reality compounds the already-existing challenges women face in building retirement wealth, creating a cycle where those who give the most care receive the least financial security in their own later years.

Questions to Ask Before You Step Back Professionally

The decision to reduce work for caregiving rarely feels like a choice. Crisis hits, and you respond. But even in urgent situations, taking time to assess your financial capacity can help you make more informed decisions about what level of caregiving you can sustainably provide.

Can your household absorb the income loss? Calculate not just the immediate impact of reduced hours or leaving work, but the long-term effects on retirement savings, Social Security benefits, and career trajectory. Consider whether your partner's income and benefits can bridge the gap, and for how long.

Do you understand the full impact on your retirement timeline? Every year you contribute less to retirement accounts is a year of lost compound growth. If you're 45 and stop contributing $10,000 annually to your 401(k) for three years, for example, you could lose over $180,000 in retirement savings by age 65, assuming a 7% annual return.

Are there alternatives to leaving work entirely? Before making drastic changes, explore options like:

  • Negotiating flexible hours or remote work arrangements
  • Using Family and Medical Leave Act (FMLA) protections for temporary leave
  • Hiring professional care services for the most time-intensive tasks
  • Coordinating care responsibilities among multiple family members
  • Investigating adult day programs or respite care services

Building Your Financial Safety Net

If stepping back from work becomes necessary, having a financial contingency plan can help protect your long-term security while you provide care for others:

  • Strengthen your emergency fund. Traditional advice suggests three to six months of expenses, but caregivers should consider building a larger cushion. Care needs can be unpredictable, and having extra reserves provides flexibility to handle both your own financial needs and unexpected care expenses.
  • Review your insurance coverage. Make sure your policies are up to date and adequate, including health insurance (especially if you're leaving an employer plan), disability insurance to protect your future earning capacity, and life insurance to ensure your own family's security. Consider long-term care insurance for yourself, as current caregivers are more likely to need care in the future.
  • Document your care recipient's financial situation. Understanding their assets, insurance coverage, and potential benefits can help you plan more effectively. Look into veterans' benefits, long-term care insurance, or Medicaid planning options that might reduce the financial burden on your family.
  • Maintain some retirement savings momentum. Even if you can't contribute as much, try to maintain some level of retirement savings. If you have a working spouse, consider maximizing their contributions or using spousal IRA contributions to keep building your retirement foundation.

Helping Clients Navigate Caregiving Transitions

We understand that caregiving decisions involve both financial calculations and deeply personal values. Our role is to help you understand the financial implications so you can make informed decisions that align with your family's needs and your own long-term security.

Many of our clients are navigating caregiving responsibilities, and we've developed several strategies to help minimize the financial impact while maximizing your ability to provide care, including:

  • Creating tax-efficient strategies for care-related expenses
  • Coordinating with your care recipient's financial advisors and attorneys
  • Helping you understand and access available benefits and resources
  • Adjusting your investment strategy to account for changed timelines and cash flow needs
  • Building contingency plans for different care scenarios

Our Certified Financial Transitionist training specifically prepares us to support clients through major life changes like these. We understand that caregiving isn't just a financial decision but an emotional journey, and we provide both technical expertise and emotional support during these challenging transitions.

You don't have to choose between being a loving caregiver and being financially responsible for your own future. With the right support and planning, you can honor both commitments.

Let's talk. Schedule a conversation with our team to explore how caregiving may impact your long-term financial plans and discuss strategies to help you care for others while securing your own financial future.

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