If you think you’ve planned for retirement, I’ve got bad news. There’s a line item most Americans completely ignore, and it’s the one most likely to wipe them out: caregiving.
I’m not talking about a quick stint helping Mom after a hip replacement. I’m talking about the years-long, soul-crushing, bank-draining job of taking care of a parent, spouse, or child with serious needs. And the numbers just got uglier.
New research shows that caregiving has crossed from “stressful family obligation” into “full-blown financial catastrophe.” Roughly 1 in 4 American adults is now doing it, and most of them are paying for the privilege out of their own savings.
Here’s what you need to know before it’s your turn.
1. Millions of Americans are already in the trenches
In 2025, AARP and the National Alliance for Caregiving (NAC) released a comprehensive study with a jaw-dropping headline number: 63 million Americans — nearly 1 in 4 adults — provided ongoing care for an adult or a child with a complex medical condition or a disability in the past year.
That’s up by 20 million caregivers from a decade earlier. A 46% jump in 10 years.
And it’s not light lifting. Nearly 1 in 4 caregivers report providing over 40 hours of care per week, and one-third have been caregiving for five years or more.
Translation: Caregiving is a second full-time job, unpaid, with no benefits and no set end date.
2. The ‘free’ labor is worth over a trillion dollars, and it’s coming out of your hide
If family caregiving were a company, it would be the biggest one on Earth.
AARP’s report, “Valuing the Invaluable 2026,” calculates that more than 59 million people in the U.S. spend 49.5 billion hours providing unpaid care to other adults, valued at roughly $1.01 trillion if they were actually paid.
To put that in perspective, the economic value of this caregiving exceeded the total amount of federal and state Medicaid spending in 2024 of $932 billion.
Read that again. Family caregivers are propping up America’s long-term care system to the tune of more than a trillion dollars a year. And nobody’s reimbursing them.
3. The out-of-pocket hit averages $7,200 (and that’s the lowball)
Most caregivers aren’t just donating their time. They’re writing checks.
AARP tracked out-of-pocket caregiving spending and found the average totaled $7,242 a year, roughly 26% of the caregiver’s income.
One-quarter of your income. Gone. Every year.
And it gets worse depending on the situation. Caregivers looking after someone with Alzheimer’s or dementia spent closer to $9,000, and those caring for a loved one with mental health issues weren’t far behind.
Working caregivers who had to juggle schedules and take leave? Those reporting two or more work-related strains averaged $10,525 per year — nearly double.
4. Paid care will eat you alive
If you think you’ll just hire help and write it off, brace yourself.
The 2025 CareScout Cost of Care Survey — the industry benchmark since 2004 — pegs the national median for a private room in a nursing home at $355 a day, or $129,575 a year.
Semi-private? $315 a day, or $114,975 annually.
Assisted living? $6,200 a month, or $74,400 annually.
Even hiring a non-medical caregiver to come to the house — someone to help with bathing, cooking, or getting out of bed — runs $35 an hour, which works out to about $80,080 a year at 44 hours a week.
Do the math against the median 401(k) balance of someone in their 60s. You’ll see why caregiving is called the silent retirement killer.
For a deeper look at what’s driving these numbers, read our breakdown of the high cost of long-term care in 2026.
5. Medicare won’t save you, and most people don’t realize it
Here’s the myth I have to bust in nearly every conversation about retirement: Medicare does not pay for long-term care.
Not nursing homes. Not assisted living. Not the home health aide who comes to bathe your mother.
Straight from Medicare.gov: “Medicare and most health insurance, including Medicare Supplement Insurance (Medigap), don’t pay for long-term care services, including care in a nursing home or in the community.”
Medicare covers short-term skilled rehab after a hospital stay. That’s it. Most nursing home care is classified as custodial — help with bathing, dressing, eating, using the bathroom — and custodial care is explicitly excluded.
Medicaid will step in, but only after you’ve spent nearly everything you own. That’s a policy feature, not a bug.
6. Caregivers are tanking their own retirements
The financial damage isn’t just what you spend today. It’s the retirement you’re killing tomorrow.
Nearly half of caregivers in the AARP/NAC study experienced at least one major financial impact — taking on debt, stopping savings, or being unable to afford food.
A Columbia University study sponsored by Otsuka found something even scarier: Caregivers who start young are at risk of facing up to a 90% deficit in retirement savings by age 65 compared to non-caregivers, potentially requiring an extra 21 years of work to catch up.
Twenty-one extra years on the job. Because you took care of your mother.
Women take the hardest hit. According to a study led by University of Pennsylvania professor Norma Coe, the median lost wages for women providing intensive care for their mothers is $24,500 over two years.
That’s not a rounding error. That’s a car. A home down payment. A Roth IRA for a decade.
And if you’re staring down a dementia diagnosis in the family, the financial planning piece has to happen immediately, while your loved one can still participate. Our walkthrough of the steps to financially plan for dementia or Alzheimer’s explains why powers of attorney, in particular, can’t wait.
7. Help is coming — slowly — but you can’t wait for it
There’s a bipartisan proposal sitting in Congress called the Credit for Caring Act that would give working caregivers a federal tax credit of up to $5,000. A recent AARP survey found 84% of registered voters support it across party lines.
Eighty-four percent support. In this political climate. That’s an earthquake.
A handful of states aren’t waiting. Oklahoma enacted a caregiver tax credit worth up to $2,000 in 2023, Nebraska followed in 2024, and at least a dozen more state legislatures are considering similar bills.
But here’s the catch: even if the federal credit passes tomorrow, $5,000 doesn’t put a dent in $80,000 a year for home care. You still need a plan.
What to do right now
Don’t wait until your dad falls or your mom gets a diagnosis. By then it’s too late, and you’ll be making six-figure decisions in a hospital hallway at 2 a.m.
Here are three moves to make this month:
1. Have the awkward conversation. Sit down with your parents and your spouse. Who has long-term care insurance? Who doesn’t? What are their assets? What are their wishes? If you need a script for breaking the ice, steal one from “3 Tough Money Conversations You Need to Have With Your Parents.”
2. Price out long-term care insurance while you still can. The sweet spot is your 50s to early 60s. Wait too long and premiums skyrocket, or you get denied outright. Our guide on who actually needs long-term care insurance lays out the tradeoffs.
To estimate the costs and get coverage, here's a free long-term care insurance comparison site.
3. Know the alternatives. Traditional long-term care insurance isn’t the only answer. Hybrid life policies, deferred annuities, and health savings accounts all have a role to play. Learn more in “11 Ways to Pay for Long-Term Care Without Buying Expensive Insurance.”
Caregiving is coming for most of us. The U.S. Department of Health and Human Services estimates that 7 in 10 Americans over 65 will need some form of long-term care.
The only question is whether you’ll be ready for it — or ruined by it.
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