The unexpected financial impact of family caregiving
If you have employees who are caring for family members, did you know that they spend an average of $7,200 a year on out-of-pocket expenses?¹ The extra expenses can make it hard to save for—or even imagine—retirement. By understanding how caregiving affects finances, we can help you develop strategies to help your employees who are caregivers stay on track for retirement.
Caregiving comes with direct and indirect costs
In the United States, 37.1 million people provide unpaid eldercare, and 61% also have jobs. Caregiving can cause financial strain from direct costs such as medical bills and equipment, as well as indirect costs such as lost wages and career interruptions.
Manulife John Hancock and the MIT AgeLab are collaborating on a five-year research study to help improve quality of life for an aging population and their loved ones. The MIT AgeLab’s CareHive panel studied how these expenses can affect caregivers using a scale of 0.0 (not at all) to 1.0 (very much).
Expenses causing financial strain for caregivers (ranked from highest to lowest)
| Category | Definition | Rating |
| Household | Bills and fees for assisted living or nursing homes, mortgage/rent, utilities, or auto/home insurance | 0.47 |
| Services | Adult day care programs, legal service providers, geriatric care managers, or home repairs or modifications | 0.39 |
| Transportation | Paratransit services, taxis or rideshares, or public transit passes | 0.37 |
| Medical | Prescriptions, healthcare providers, rental expenses for medical equipment and mobility devices, medical insurance premiums, or out-of-pocket costs for uncovered care or specialized therapies | 0.31 |
| Technologies and products | Personal assistant devices or smart displays such as monitoring alerting systems or subscription fees, clothing, entertainment, or games | 0.26 |
| Personal products | Personal hygiene items, adult diapers or other incontinence supplies, household supplies, groceries, personal services (e.g., haircuts, manicures, and massages), and phone, internet, cable, or television services for care recipient | 0.25 |
MIT AgeLab, December 2023.
The cost of caregiving can be a setback to retirement savings
Caregiving expenses can make saving for retirement difficult. This, in turn, can affect the overall retirement readiness of your employees, especially since people are living longer. There are some unique financial implications related to caregiving, including:
- Reduced income—Caregivers may work fewer hours, leave their job, or retire early, which means less money is available to save for retirement.
- Decreased retirement contributions—Working less overtime equals less money going into a 401(k) or IRA.
- Withdrawing savings—Taking money from retirement accounts to cover expenses can reduce savings and potentially incur penalties.
- Missing employer matching contributions—Leaving jobs or cutting hours can mean losing out on 401(k) matching contributions.
- Lower Social Security benefits—Reduced earnings over a career can lead to smaller benefits in retirement.
Caregivers need specialized support with retirement planning
Employers can play a critical role in helping their employees balance work and caregiving activities. Helping caregivers find ways to save for retirement can improve their financial well-being and retirement readiness.
Here are some ways you can support your employees:
- Offer access to financial professionals—Encourage employees to consult a financial professional for personalized help juggling the costs and challenges of caregiving while keeping retirement goals on track.
- Provide educational resources—Offer employees tools, calculators, and targeted educational articles and webinars to help them navigate the dual roles of working and being a caregiver.
- Expand employee benefits and resources—Benefits such as flexible work arrangements, emergency backup care, and caregiver support groups can help employees manage their responsibilities.
- Offer an emergency savings option—Setting up emergency savings accounts² can help employees save for unexpected caregiving expenses.
Consider which of these strategies would best help your employees maintain their financial health and save for retirement while helping you maintain a productive and happy workforce.
Helping caregivers save for retirement
Employees who are also caregivers can face challenges that make it hard to save for retirement. By supporting the family caregiving and longevity planning needs of your employees, you can foster a supportive culture, build a loyal workforce, and help your employees stay on track with their retirement plan. Work with your retirement plan advisor or recordkeeper to explore ways to incorporate the strategies that are right for your business.
1 "The Overwhelming Financial Toll of Family Caregiving," AARP, February 2025. 2 Emergency savings is a product offered by John Hancock Personal Financial Services, LLC, an SEC investment adviser registered under the Investment Advisers Act of 1940.
John Hancock and the Massachusetts Institute of Technology are not affiliated and neither is responsible for the liabilities of the other.
Important disclosures
The content of this document is for general information only and believed to be accurate and reliable as of the posting date but may be subject to change. It is not intended to provide investment, tax, plan design, or legal advice (unless otherwise indicated). Please consult your own independent advisor as to any investment, tax, or legal statements made.
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