A recent survey from the Employment Benefit Research Institute (EBRI) found that working parents are feeling less optimistic about the future than at any time since the Great Recession — in spite of fresh signs that the economy may be trending clear of a new recession. In its annual survey, EBRI found the biggest sudden drop of retirement confidence since 2008 and found that caregivers, in particular — a category that includes anyone with kids at home — have more negative feelings and lower confidence than all those surveyed.
That families — especially those in the so-called sandwich generation, who are caring for kids and adults at the same time — are under immense pressure in the U.S. is a given. But EBRI’s numbers illuminate what that means day-to-day: 66% of those surveyed say their caregiving responsibilities have negatively impacted their mental health, and 57% say their physical health has been adversely affected. Financial stress — including the ability to save for emergencies, save for retirement, or manage household finances — was intense among working caregivers and retired caregivers alike.
Almost two-thirds of low-income caregivers — in the study, a caregiver is defined as anyone who provides unpaid care for an adult and/or a child in the home or other non-institutional setting — are not confident they’ll have enough money in retirement to keep up with rising inflation. The same held true for half of middle-income caregivers surveyed. And of all those surveyed who are still in the workforce, more than 75% said that saving for retirement is a source of stress.
“Caregivers can take on many roles and responsibilities when taking on the care of a relative or friend,” wrote the report authors. “These responsibilities can take a toll on the caregivers’ mental and physical health and their finances. In fact, caregivers are more likely to have lower levels of assets and have problems with debt than non-caregivers. With these burdens on caregivers, they are less able to save for retirement and are more likely to have retired earlier than planned for reasons out of their control, which can greatly hinder the lifestyle of caregivers in retirement.”
The High Cost Of Caring For Others
Parenting — and caregiving — in the U.S. is notoriously lonely work, without a job-protected paid leave program or other federal safety nets in place. Only a handful of states have state-run paid leave programs. The same is true of child care: while costs skyrocket, providers themselves are struggling to make ends meet, and without a federal program to subsidize costs, support providers, and increase access, child care remains a necessity treated as if it were, well, a treat.
No surprise, EBRI’s survey found that the burden of caregiving is an especially big drain on families who are supporting both kids and other adults. More than half of caregivers who are still a part of the workforce said they provided financial assistance as part of their caregiving. But even in the case of households where kids are the sole dependents, the cost of child care alone takes a toll.
A survey from Care.com found that families are spending roughly a third of their household income on child care; nearly two-thirds of parents surveyed planned to spend more than $18,000 — per child — on child care in 2023. Locally, things might be less expensive — or more expensive. Beginning in kindergarten, public school is free, but private K-12 schools can cost up to $23,000 per year, on average, according to Education Data.
Employer-sponsored health insurance also leaves critical gaps: some 4 million children are uninsured in the United States, making health care expensive and challenging to access. These costs add up for parents and other caregivers, and can ultimately be ruinous for families.
The Return Of Student Loan Payments
Millennials and GenXers — those most likely to be entering the sandwich generation — have had a years-long break from student loan payments and collected interest. But with interest resuming on September 1 and loan repayments relaunching in October, borrowers will have to strike a whole new balancing act between bills, necessities, and savings. The average Gen X-er has more than $40,000 in debt. The 15 million Millennials with student debt — more than any other generation — carry an average of over $33,000 per borrower.
EBRI found that many caregivers have had to ask for financial help to make ends meet: 27% of working caregivers said they have borrowed money from family or friends to pay for their expenses, while 25% of working caregivers said they’ve taken on new or additional debt; 20% had reduced their retirement contributions, and 10% said they’ve made early withdrawals from their retirement savings plan to get by.
Why We Don’t Save For Retirement
A separate and recent survey from the TransAmerica Center for Retirement Studies found that the median retirement savings so far for Baby Boomers is just $162,000. For Gen-Xers, it’s $87,000, and for Millennials, $50,000. That’s despite the fact that the youngest boomers are in their early 60s and the youngest Gen Xers in their early 40s. Retirement experts like Fidelity suggest you have about 3x your salary saved by the age of 40, and 10x by the age of 67. You can do the math from there (and you probably already are.)
For the vast majority of households, retirement savings are in direct competition with near-term savings for unexpected events. A Bankrate 2023 annual emergency savings report found that more than 1 in 5 Americans have no emergency savings — and just 30% said they have enough to cover three months of expenses. EBRI’s survey found that caregivers are particularly vulnerable to that equation: 54% of working caregivers said they can’t afford to save for emergencies, far more than non-caregivers.
According to EBRI’s findings, most households — some 75% — were knowledgeable about managing day-to-day finances. And more than half reported being knowledgeable about investing for the future and are confident in their ability to choose smart investments.
In short, people know how to save money — and grow their money — but there’s simply no pie left, for too many, when it comes to saving for the future. The vast majority of working caregivers who earn less than $75,000 per year say that saving for retirement is not as much of a priority as providing for their families in the present.