Association for Public Policy Analysis & Management

Many Americans provide crucial support to frail family members. Despite recent health improvements among adults ages 65 and older, most people continue to develop disabilities as they grow older and eventually require assistance with the basic tasks of everyday life. Spouses and adult children usually provide this help. Working without pay and often putting in long hours over many months or years, family caregivers significantly improve the quality of life for many frail older adults. The help they provide often keeps older people out of expensive nursing facilities and in their own homes, which most prefer.

Yet care responsibilities often impose serious burdens on caregivers. If unpaid caregivers take lower paying jobs, reduce their work hours, or quit their jobs, they might not save as much and might end up with lower Social Security and pension benefits going into retirement. If they use their retirement savings to help pay caregiving expenses, they could also start retirement at a disadvantage. It is important to understand how informal caregiving affects retirement savings—particularly for women. Their retirement security can already be precarious and they are most likely to provide care.

Using data from multiple waves of the Health and Retirement Study (HRS), this study analyzes the effect of informal caregiving on older adults’ economic resources. We find that those who care for their elderly parents are financially better off than noncaregivers, while those who care for their spouses are worse off than noncaregivers. However, over time both groups of caregivers experience less growth in their assets and are more likely to fall into poverty than noncaregivers—even after controlling for other factors. For example, each wave of parental caregiving reduces the percentage growth in assets 2 percent and increases the likelihood of falling into poverty 3 percentage points. Each wave of intensive care increases the chances of being poor 12 percentage points.

Spouse caregiving has an even stronger impact on economic well-being than parent caregiving. Each wave of intensive spousal care lowers wealth $9,000, reduces the percentage growth in wealth 14 percent, and increases the chances of falling into poverty 5 percentage points. Furthermore, those who ever provide spouse care have $12,000 or 12 percent less wealth 10 years later, while those who ever provide intensive spouse care have $19,000 or 25 percent less wealth and are 10 percentage points more likely to be poor.