Retirement expert: The need for unpaid caregivers is ‘about to skyrocket’

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Across the US, family members caring for loved ones provide an estimated $600 billion in unpaid care each year, sacrificing time, money, and often their well-being to care for aging loved ones, according to an AARP survey.

And the need for caregivers “is about to skyrocket,” Surya Kolluri, the head of the TIAA Institute, said in a recent Decoding Retirement podcast (see video above or listen below).

It’s high time that individuals, families, and employers start addressing the issues associated with unpaid caregiving, Kolluri said, and he outlined some of the statistics to make his case.

Since 2011, some 10,000 baby boomers have been turning 65 every day, and that number is on the rise, he said. In fact, 2024 marked the beginning of what’s been described as “Peak 65,” the largest surge of Americans turning 65 in US history. Over 4.1 million Americans will turn 65 each year through 2027, which is more than 11,200 every day.

What’s more, baby boomers are living longer than previous generations. According to Kolluri, life expectancy at birth has increased by about 17 years since Social Security’s inception.

At the same time, he noted, 1 in 5 adults provide uncompensated care and spend an average of $7,200 per year on costs associated with such care.

Caregivers, in general, have lower financial assets and higher levels of debt compared to those who don’t care for loved ones. In fact, 1 in 4 of those caregivers have less than $1,000 in savings and investments. For non-caregivers, the number is close to 1 in 7.

To make matters worse, Kolluri pointed out that caregivers typically devote an average of 24 hours per week to unpaid care, and 60% of them also juggle jobs outside the home.

If you’re managing your job and caregiving responsibilities, there’s a price to be paid.

“We find that 61% of those caregivers reported at least one work-related consequence,” Kolluri said. “What do I mean by that? Arriving late, leaving early, taking time off, or, as we saw during the pandemic, retiring sooner than planned.”

There’s an even steeper cost for women and millennials (those generally born between 1981 and 1996). In TIAA’s research, 60% of caregivers are women and 25% of caregivers are in their 20s or 30s.

“Becoming a caregiver … at an early age has heightened implications because people in this age group might not be in their peak earning capacity,” Kolluri said. “They might have lower salaries and should be focusing on taking strides in their careers. Now they have this other responsibility.”

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Plus, those millennials might also be raising children. “And this creates even more emotional and financial burdens on them,” Kolluri said.

Kolluri highlighted strategies that can help families avoid the negative impacts of unpaid caregiving.

In most cases, Kolluri said it’s a crisis — a “hair-on-fire moment” — that triggers the need for unpaid caregiving. But if you have a plan in place to address caregiving responsibilities, “you can put out that fire quicker,” he said.

“I think it’s very important for individuals and families to include this topic of caregiving in financial planning,” Kolluri said.

To be sure, these discussions aren’t always easy. Kolluri shared his personal experience of caring for his 88-year-old father.

“That dialogue was not easy,” he said. “I may be an expert in caregiving, but when it comes to having that actual conversation with your parent, it’s difficult. … It’s been a three-year journey for me.”

Employers can also play a crucial role by offering benefits such as flex time, paid family leave, and geriatric care management. Kolluri emphasized the importance of training frontline managers to ensure they can effectively provide and communicate these resources to their staff.

“It can be a productivity loss if a peak performer at the company goes into this caregiving responsibility,” Kolluri said. So those benefits can “really help alleviate an employee’s stress around this.”

Lastly, Kolluri said tools such as the Caregiver Intensity Index can help those already providing caregiving services assess how caregiving affects their well-being and how they’re coping with financial stressors and other stressors.

Each Tuesday, retirement expert and financial educator Robert Powell gives you the tools to plan for your future on Decoding Retirement. You can find more episodes on our video hub or watch on your preferred streaming service.