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Could taking time out of the workforce to become a caregiver destroy someone’s chances at a comfortable retirement?
For Susan Freeman, 72, the answer is yes. Although Freeman doesn’t regret her decision to care for her mom, it destroyed her hope of financial independence (1).
Before helping her mother full-time, Susan Freeman worked in various industries like banking, insurance and food services (including a pizzeria she owned). As her mother’s needs increased after a stroke, Freeman had to sell the pizzeria, and she lived largely on Social Security disability checks and her husband’s income.
Besides the financial strain, this arrangement led to a temporary separation, with Freeman’s husband staying with their daughter.
Freeman’s mother eventually moved to a nursing home in 2015 and passed away in 2019, but this period permanently altered her financial future. At 72, she’s still working four days a week at her sister’s store with limited savings to fund her retirement.
Despite the financial hardship, she says she’s proud she cared for her mom and that she “felt the obligation to help.” But she also admitted, “Instead of always putting my family first, I should’ve thought about myself more. A lot of the responsibility fell on me. I had given up a lot (1).”
Freeman’s story offers a valuable lesson: Before leaving the workforce to become a full time carer, consider the financial pros and cons and how you can safeguard your retirement plan to ensure you’re caring for yourself in your old age.
Here’s why caring for loved ones — as necessary as the work is — can be a serious financial risk, especially for those nearing retirement.
The increase in longevity makes decisions around long-term care a tough reality for many Americans like Freeman.
According to a recent Edward Jones survey, 2 in 5 American adults already identify as caregivers, and this is expected to rise to 46% in the future (2). Meanwhile, AARP’s 2025 edition of the Caregiving in the U.S. report found that 63 million Americans are now involved in caregiving, nearly a 50% increase since 2015 (3).
In addition to the immense emotional impact, these surveys reveal the extreme financial hardships caregivers face.
Edward Jones research shows that 95% of caregivers are concerned about the security of their retirement, and over half say they had to reduce their personal spending. Like Freeman, 25% of respondents walked away from their jobs, while another 24% took on fewer hours and 16% used their retirement savings to help with care 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 Care Insurance Program estimates that annual home care costs are $51,480, while assisted living costs are $66,132, and a semi-private room in a nursing home costs $112,420 (4).
These costs don’t just fall to those receiving the care. The AARP reports that about three-quarters of family caregivers spend an average of roughly $7,200 out of pocket to contribute to these expenses (5).
And the need for long-term care is only expected to grow. An analysis prepared for the HHS Office of the Assistant Secretary for Planning and Evaluation found that 56% of Americans turning 65 between 2021 and 2025 will need long-term services and supports at some point in their lives (6).
With costs like these, planning ahead can make a big difference. One way to prepare for those costs and reduce the financial pressure on you or your family is by considering long-term care insurance.
One option is GoldenCare, which offers comprehensive long-term care insurance policies to help cover the costs of care when you can no longer perform daily activities.
But long-term care isn’t one-size-fits-all. That’s why GoldenCare offers several options that are tailored to your needs and your budget. They include hybrid life or annuity with long-term care benefits, short-term care, extended care, home health care, assisted living and traditional long-term care insurance.
With GoldenCare, you can get one-on-one customer service from its Long-Term Care Specialists to help identify the best coverage options for you and your budget.
Over the long term, the Urban Institute estimates that women who provide unpaid care forgo an average of about $295,000 in lifetime income (which includes lost wages and reduced retirement benefits). Besides the lost cash flow, these lower earnings often translate to smaller Social Security benefits and weaker retirement security down the line (7).
Nobody can prepare for the shock of a health emergency, but reviewing the real costs of caregiving today can help families avoid making rash decisions that undermine their financial futures. These costs include paid home care, assisted living and professional help.
For guidance, consider partnering with a financial planner who can help you understand your current financial options and eligibility for assistance through Medicaid, veterans benefits, long-term care insurance or state caregiver programs that can offset costs.
In some states, for instance, Medicaid Home and Community‑Based Services waivers also let eligible older adults get care at home — and sometimes even pay family members as caregivers through self-directed options (8).
Finding the right advisor is simpler than ever with Advisor.com. Their platform connects you with licensed financial professionals in your area who can provide personalized guidance.
Just enter a few details about your finances and goals, and Advisor.com’s AI-powered matching tool will connect you with a qualified expert who can help you maximize not only any assistance you might get through government programs but also your own contributions to your retirement savings.
Once you’re matched with an advisor, you can book a free consultation with no obligation to hire.
Many older adults — possibly even a majority — also miss out on benefits that could save them money.
For instance, according to the National Council on Aging (9), less than half (46%) of eligible older adults are enrolled for Medicare Savings Programs, which can help with paying Medicare premiums, deductibles and coinsurance. Meanwhile, only 30% of eligible older adults are enrolled in the Supplemental Nutrition Assistance Program, which provides monthly support to older adults for the cost of food.
That’s why senior-focused organizations like AARP can help you navigate these options so you can make smarter choices for both your health and your finances.
AARP members get access to guides that can help you make the most of Social Security, choose the right Medicare plan and uncover other government benefits — potentially saving you thousands.
Sign up with AARP today and get 25% off your first year.
Finally, for those seriously considering stepping away from a job, remember that when you step away from the workforce, you’re not just giving up your wages. You’re eliminating many safety nets you’ll need later in life, including employer-sponsored retirement contributions and health insurance.
For this reason, it’s important to have a financial cushion if you choose to walk away from a reliable paycheck. Having an emergency fund with at least three to six months’ worth of living expenses can offer peace of mind.
A high-yield account, such as a Wealthfront Cash Account, can be a great place to grow your uninvested cash, offering both competitive interest rates and easy access to your cash when you need it.
A Wealthfront Cash Account currently offers a base APY of 3.30% through program banks, and new clients can get an extra 0.75% boost during their first three months on up to $150,000 for a total variable of 4.05%.
That’s ten times the national deposit savings rate, according to the FDIC’s March report.
Additionally, Wealthfront is offering new clients who enable direct deposit ($1,000/mo minimum) to their Cash Account and open and fund a new investment account an additional 0.25% APY increase with no expiration date or balance limit, meaning your APY could be as high as 4.30%.
With no minimum balances or account fees, as well as 24/7 withdrawals and free domestic wire transfers, your funds remain accessible at all times. Plus, you get access to up to $8M FDIC Insurance eligibility through program banks.
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— With files from Eric Esposito
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Business Insider (1); Edward Jones (2); AARP (3), (5), (6); Federal Long Term Care Insurance Program (4); Urban Institute (7); Medicaid.gov (8); National Council on Aging (9)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
