It's hard to imagine trading a well-paying job for longer hours and no pay, but that's what a growing number of Americans are being forced to do.
They're the unpaid caregivers who provide support to loved ones. To do so, they're cutting back on work hours or taking early retirement.
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Today, nearly three in 10 Americans aged 25 or older are taking on this role.
As a new Employee Benefits Research Institute (EBRI) report reveals (1), they're jeopardizing their retirement security in the process. And they know it.
"Even if you've done everything right till you're 50, let's say your spouse has a stroke and they need caregiving, you may have to retire and dip into savings sooner," study co-author Craig Copeland, EBRI's director of Wealth Benefits Research, told Moneywise.
Like compounding interest in reverse, the costs and lost saving opportunities mount, putting caregivers and their families at risk.
Here's a look at the extent of the problem and how forward-thinking employers are responding.
Caregivers don't just provide practical support. They provide financial support too.
According to the EBRI research, 34% of caregivers who work and 20% of retired caregivers financially support their care recipients. For Sandwich Generation caregivers, or those stuck between caring for two generations, that's on top of paying for their children's needs as well.
"That's a big issue," Copeland told Moneywise. "They have less money to take care of their own finances."
Even if working caregivers have a job with a 401(k) retirement savings plan, they can't contribute as much as non-caregiving colleagues because they need to take time off work or reduce their hours, resulting in lower pay.
For caregivers who have retired (often involuntarily, with 56% forced into this position), the situation is more pressing. Savings dwindle. Many go into debt. According to the research:
69% of caregivers report that debt is a problem
34% of caregivers have less than $10,000 in savings and investments
Social Security isn't an answer. As the Bipartisan Policy Center warns (2), Social Security's primary trust fund will be exhausted by 2032, with current and future beneficiaries seeing a projected 22% cut to their benefits. The Committee for a Responsible Federal Budget pegs the potential cut a hair higher at 24% (3).
A big part of the reason: Back in 1960, there were 5 workers for every 1 Social Security beneficiary. Today there are just 2.9 workers per beneficiary.
Losing more employees to take on full-time, unpaid work as caregivers won't help. So what will?
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Copeland says employers can do more to support working caregivers, offering subsidies for elder care so they don't have to reduce their hours or quit the workforce altogether.
Bank of America is doing just that. Moneywise reached out to Bank of America's director of gerontology Cyndi Hutchins to learn more.
"Elder care is much more of a front-and-center topic today," she told Moneywise, citing the aging population.
Her research (4) and insights have influenced not only her own firm but other employers, with a growing number of companies offering caregivers benefits, including:
Supportive scheduling. Companies are increasingly allowing caregiving employees to use sick leave or paid time off for elder care. They are also accommodating workers through hybrid work, job sharing, flexible scheduling and in some cases — particularly in retail and hospitality — predictable scheduling.
Emergency backup elder care. For working caregivers, if the person that normally provides care to a loved one during the day can't show up, some employers have standing agreements with elder-care companies that provide emergency backup care at a discounted rate.
Employee resource groups. These are workplace-based peer groups of parents and caregivers that share resources and hold webinars. Hutchins says these groups help improve workplace morale and reduce isolation.
Legal services for caregivers. Hutchins said caregivers often need legal help to ensure their loved one has a will, power of attorney, health care proxy and health care directive. Some companies fully cover the cost of these services; others subsidize it.
Access to geriatric care managers. Geriatric care managers assess care recipients' homes to determine whether they're in safe surroundings and whether they're able to sufficiently care for themselves in those homes. This typically involves a four- to six-hour consultation. Some companies fully subsidize the cost of these; others subsidize it.
So what's in it for the employers? Hutchins said companies who invest in benefits for caregivers see direct benefits in increased productivity, loyalty and morale, not to mention reduced absenteeism.
"It also benefits the workforce as employers can recruit the most talented people," she added.
Long-term care isn't something most people like to think about, but it's one of the biggest financial risks many retirees face. Someone turning 65 today has nearly a 70% chance of needing some form of long-term care during their lifetime, according to data from the Administration for Community Living (5).
And the price tag can be staggering if you can't take care of a loved one yourself.
The national median cost of assisted living is more than $5,400 a month, while memory care averages over $6,600 a month (6). Even receiving care at home can cost around $34 an hour.
If you don't want your loved ones to shoulder the responsibility — both financially and emotionally — it may be worth considering long-term care insurance before you actually need it.
With GoldenCare's long-term care insurance, you can get things like nursing homes, assisted living and other daily-living aids covered so you and your loved ones don't have to pay out of pocket or rack up more health-related debts.
GoldenCare offers different options based on your needs, including 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.
All you have to do is fill in a bit of information about yourself, and GoldenCare will provide you with a free quote for long-term care coverage that fits your needs and budget.
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We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Employee Benefits Research Institute (1); Bipartisan Policy Center (2); Committee for a Responsible Federal Budget (3); Bank of America (4); Administration for Community Living (5); A Place for Mom (6)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.