Posted September 26, 2024
Congresswomen Brittany Pettersen (CO-07) and Maria Elvira Salazar (FL-27) introduced two bipartisan, bicameral bills that would allow family caregivers to better save for retirement. These bills—the Improving Retirement Security for Family Caregivers Act and the Catching Up Family Caregivers Act—would help address the financial challenges faced by individuals who leave the workforce to care for loved ones, often sacrificing their own long-term financial security. Companion bills were introduced by U.S. Senators Susan Collins (R-ME) and Mark Warner (D-VA).
“Caregivers do some of the most important but underappreciated work in our country,” said Representative Pettersen. “Caregivers do everything from cooking meals, administering medications, paying bills, and driving their loved ones to frequent medical appointments. Caregivers often take a significant financial hit when they take time out of the workforce to prioritize their loved ones and many struggle with their own financial security and ability to save in the long term. These two pieces of legislation make it easier for caregivers to save for retirement, ensuring they can take care of their own financial health while caring for their family.”
Women often take time away from careers to care for their families, resulting in a significant loss to their retirement savings. According to the Center for American Progress, an average 26-year-old female making $60,000 a year who leaves the workforce for five years to care for her children will lose close to one million dollars over her lifetime due to lost retirement assets and wage growth. A recent study from the Edward Jones Grassroots Taskforce found that 64 percent of women say their caregiving duties have negatively impacted their ability to save towards their long-term financial goals. Those taking care of an aging parent often face similar repercussions to being a family caregiver. In 2020, AARP found that three in ten caregivers have stopped contributing to their savings. Therefore, these proposals would allow those who dedicate at least 500 hours to family caregiving and are unemployed or severely underemployed the ability to contribute to their retirement now and later.
“Caregiving is one of the most important jobs, but our current policies penalize selfless Americans who look after their loved ones,” said Representative Salazar. “I’m proud to co-lead the Improving Retirement Security for Family Caregivers Act and the Catching Up Family Caregivers Act, which will reward caregivers with new opportunities to secure a dignified retirement.”
“Family caregivers provide critical support to their loved ones, yet many are forced to step away from work, significantly inhibiting their ability to save for retirement,” said Senator Collins. “Our 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.”
“Family members often make tremendous sacrifices to leave the workforce and care for their aging relatives, and as a result, they miss out on key years of saving for their own golden years,” said Senator Warner. “We need to make it easier for those folks to continue their essential care work while also securing their own financial futures. I’m proud to introduce bills that would give these family caregivers the flexibility to continue contributing to retirement accounts so it’s easier for more people to care for aging relatives without obstructing their own ability to retire with dignity.”
“Caring for a loved one living with Alzheimer’s or other dementia too often takes a devastating toll on caregivers, with many experiencing substantial emotional, financial and physical difficulties,” said Robert Egge, Alzheimer’s Association Chief Public Policy Officer and AIM president. “These two bipartisan bills will support our nation’s dementia caregivers by improving access to retirement resources that can help offset some of the financial challenges faced by families impacted by this disease. Thank you to Sens. Collins and Warner for introducing these bills and for your dedication to the Alzheimer’s community.”
The Improving Retirement Security for Family Caregivers Act would allow family caregivers to contribute up to $7,000 annually to a Roth IRA, even if their income falls below that threshold. Current law caps contributions at the lower of $7,000 or yearly income, limiting caregivers’ ability to save for retirement when their earnings are reduced due to caregiving responsibilities. By eliminating this income cap for family caregivers, the bill would help to ensure that they can continue to save for retirement despite their reduced wages.
The Catching Up Family Caregivers Act would allow family caregivers to make catch-up contributions to employer-sponsored retirement plans, an option typically reserved for those over age 50. For every year they are out of the workforce, caregivers could be eligible for an additional year of catch-up contributions, up to a maximum of five years. This provision would help caregivers who miss critical savings years get back on track with their retirement planning.
Both pieces of legislation are supported by the Alzheimer’s Association, the Edward Jones Grassroots Task Force, the Society for Human Resources Management (SHRM), the Insured Retirement Institute, and the National Alliance for Caregiving.
The complete text of the Improving Retirement Security for Family Caregivers Act can be read here.
The complete text of the Catching Up Family Caregivers Act can be read here.
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