A bipartisan proposal introduced in Congress aims to support unpaid family caregivers who often face financial challenges in their retirement years. The bill suggests allowing those who have taken a year or more off from the workforce to care for a family member without receiving any pay to make additional contributions to their retirement accounts before turning 50.
Bridging the Gap
The proposed legislation recognizes the sacrifices made by family caregivers and aims to help them make up for lost retirement income. By subtracting the number of years spent out of the workforce from age 50, caregivers would determine the age at which they become eligible to make these additional contributions.
Current Limitations
At present, retirement accounts have annual contribution limits, and individuals can only make catch-up contributions once they reach the age of 50. This bill seeks to address the vital need to support caregivers who have often made significant personal sacrifices to care for their loved ones.
Recognizing the Value of Caregiving
With caregiving increasingly being acknowledged as a significant public health and economic issue, this proposal comes at a crucial time. According to AARP, unpaid family caregivers in the United States provided care valued at an astonishing $600 billion in 2021 alone. This valuation is based on approximately 38 million caregivers who collectively dedicated an average of 18 hours per week, totaling a staggering 36 billion hours of care. The average value placed on each hour of these caregivers’ time is estimated at $16.59.
In conclusion, this bipartisan proposal strives to address the financial challenges faced by unpaid family caregivers who devote their time and energy to caring for their loved ones. By allowing them to make additional contributions to their retirement accounts, this bill recognizes the value of their dedication and aims to provide some financial relief.
Expanding Retirement Savings for Caregivers
U.S. Representative Chris Pappas, a Democrat from New Hampshire, has introduced a bipartisan bill called the Expanding Access to Retirement Savings for Caregivers Act. This legislation aims to address the financial challenges faced by individuals who temporarily leave the workforce to provide care for their loved ones.
According to Rep. Pappas, caregivers should not be penalized on their retirement and forced to make do with less later in life. The bill proposes allowing caregivers to make catch-up payments to their 401(k), IRAs, and other accounts. This way, they would not lose out on valuable retirement savings as a result of the time they took to help their family members in need.
Rep. Pappas joined forces with U.S. Representative Claudia Tenney, a Republican from New York, and U.S. Representative Debbie Lesko, a Republican from Arizona, to introduce this important legislation on December 13.
Research published in JAMA Network highlights that the burden of unpaid care needs disproportionately falls on women, which has devastating effects on their health, well-being, and labor-force participation. In fact, women provide 2.2 times more unpaid family caregiving than men in the United States.
Rep. Tenney emphasized the need to address this issue by saying, “Many individuals across the country take time away from work to care for a loved one, which can result in missed opportunities to save for retirement.” She believes that this bill would help level the playing field for caregivers and provide them with additional tools to contribute to their retirement savings.
This legislation recognizes the important role of caregivers and seeks to ensure that they are not financially disadvantaged for their selfless acts of caregiving. By allowing caregivers to make catch-up payments to their retirement accounts, the Expanding Access to Retirement Savings for Caregivers Act offers a hopeful solution for those who prioritize their loved ones’ well-being.
