Strategies for a successful retirement

Family caregivers in the United States provide an estimated $1 trillion worth of unpaid care each year, yet many face significant financial setbacks that jeopardize their own long-term security. In response, lawmakers from both parties have introduced two new bills designed to help caregivers save more effectively for retirement. These measures address the unique challenges faced by those who reduce their work hours or leave the workforce entirely to care for loved ones with illnesses, disabilities, or age-related needs.

The proposals — the Improving Retirement Security for Family Caregivers Act and the Catching Up Family Caregivers Act — represent a growing bipartisan effort to ease the economic burden on caregivers without penalizing them for their vital contributions to family and society.

Family caregivers typically receive no compensation for their work. Many must cut back on paid employment or step away from their jobs for months or even years, resulting in lost wages, reduced Social Security credits, and diminished retirement savings.

According to the AARP Public Policy Institute, caregivers provided nearly $1 trillion in unpaid care in 2024. A 2021 AARP survey found that 78% of caregivers incur out-of-pocket expenses related to caregiving, averaging $7,242 annually. Women make up about three in five caregivers, with the average age around 51, based on a 2025 joint report by AARP and the National Alliance for Caregiving.

These responsibilities come at a steep personal cost. Women already tend to have lower retirement savings than men. Vanguard’s 2025 “How America Saves” report shows the average 401(k) balance across all ages is $126,971 for women compared to $171,859 for men. Caregiving interruptions only widen this gap.

“Caregivers need all the help they can get,” said Cindy Hounsell, founder and president of the Women’s Institute for a Secure Retirement, a nonprofit that supports the new legislation. “A lot of times they have to leave their jobs to take care of parents, children or in-laws. So these bills are a good thing and a step in the right direction.”

The aging U.S. population is intensifying the issue. The number of Americans aged 65 and older reached 61.2 million in 2024, a 13% increase from 54.2 million in 2020, according to the U.S. Census Bureau. The country is currently experiencing “peak 65,” with record numbers turning 65 each year, which is expected to drive even greater demand for family caregiving in the coming decades.

Both bills were introduced last week in the House and Senate and have been referred to the respective tax-writing committees — the Ways and Means Committee in the House and the Finance Committee in the Senate.

The Improving Retirement Security for Family Caregivers Act
This legislation would allow qualifying family caregivers to contribute up to the full annual maximum to a Roth IRA, even if their earned income falls below that limit in a given year. For 2026, the standard IRA contribution cap is $7,500 (or the individual’s earned income, whichever is lower).

To qualify, a caregiver would need to provide at least 500 hours of caregiving per year while working fewer than 500 hours in paid employment. The bill aims to remove the income barrier that currently prevents many caregivers from building retirement savings during periods of reduced work.

This approach is similar in spirit to the existing spousal IRA rule, which allows a working spouse to contribute to an IRA on behalf of a non-working spouse when filing jointly. However, the new measure would be broader and more flexible, particularly for caregivers who may not fit neatly into traditional spousal IRA criteria, according to Paul Richman, chief government and political affairs officer at the Insured Retirement Institute, which supports the bills.

The Catching Up Family Caregivers Act
This second proposal targets caregivers who return to the workforce after a period of caregiving. It would permit them to make maximum “catch-up” contributions to workplace plans such as 401(k)s, regardless of their age, for up to five years after re-entering employment.

Under current rules, the 2026 standard 401(k) contribution limit is $24,500. Workers aged 50 and older can add an extra $8,000, while those aged 60 to 63 can contribute an additional $11,250. The bill would allow qualifying caregivers to access the highest catch-up amount ($11,250) on top of the standard limit for five years, helping them accelerate savings after time away from the workforce.

These two new bills join other pending proposals aimed at easing the financial pressures on family caregivers. The bipartisan Credit for Caring Act would provide a $5,000 tax credit to working caregivers. Another measure, the Lowering Costs for Caregivers Act, would expand the use of health savings accounts (HSAs) and flexible spending accounts (FSAs) to cover medical expenses for parents or in-laws. Both have been under consideration since March 2025.

Sen. Susan Collins (R-Maine), a cosponsor of the retirement-focused bills, emphasized their importance: “These two bipartisan bills would give these individuals a better opportunity to build a secure financial future and help ensure they are not penalized for the vital care they provide.”

Because women disproportionately shoulder caregiving responsibilities, these proposals could have a particularly meaningful impact on closing the retirement savings gender gap. By providing more flexible contribution rules and catch-up opportunities, the bills seek to prevent caregiving from becoming a permanent financial handicap.

Experts note that while the measures are modest steps, they represent important progress in recognizing the economic value of unpaid care work. As America’s population continues to age, supporting caregivers’ financial health will become increasingly critical for both individual security and broader economic stability.

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