The Real Cost of Caregiving for Your Family and Finances

Peter Richardson is a vice president of Planning Philosophy and Thought Leadership at Northwestern Mutual.

Most people don’t become caregivers all at once. It may begin with groceries, a ride to an appointment, or help managing bills. Over time, those tasks can grow into a meaningful commitment of time, money, and attention. Northwestern Mutual’s 2026 Planning & Progress Study found that 39 percent of Americans are caregivers or have been caregivers, and 56 percent believe they’re likely to provide long-term care for a loved one.¹

Caregiving is an act of support, but it’s also a financial planning event. The goal isn’t to reduce a family decision to dollars but you also want to understand the tradeoffs early enough to preserve choices for the person receiving care and financial security for the people providing it.

What caregiving really costs

Start with the costs that show up on a receipt: transportation, medical supplies and equipment, home modifications, household expenses, professional help, and assistive technology. In Edward Jones’ Financial Impact of Caregiving study, caregivers who make unreimbursed contributions spent $8,737 a year in support of care recipients, rising to $12,863 if the person receiving care had insufficient financial resources to support themselves². This is a useful benchmark but not a forecast for your family. Actual costs depend on the type, intensity, duration, and location of care.

How caregiving expenses build over time

Many caregiving expenses recur for months or years. You may begin with transportation and occasional household help, then add home modifications, more hours of paid assistance, or a different care setting. The planning question isn’t only “What does care cost today?” but also “How might the need evolve, and which resources should pay for it?”

Northwestern Mutual’s 2026 Planning & Progress Study shows how those costs can spread through a household plan: 32 percent of current and former caregivers reduced spending, 25 percent used personal or emergency savings, 20 percent took on credit-card debt, and 10 percent redirected retirement funds¹. A care expense can affect liquidity, debt, and retirement at the same time.

Caregiving can affect both current earnings and future earning power. Among working-age family caregivers, seven in 10 are employed, half report work disruptions such as arriving late, leaving early, or taking time off, and 18 percent have moved from full-time to part-time work or reduced their hours because of caregiving.¹

The pressure can run in the other direction as well. Northwestern Mutual’s Planning & Progress Study found that 21 percent of current and former caregivers worked longer hours or took a second job or side gig to absorb the financial impact.¹

That’s why a change at work should be treated as a long-term planning decision, not just a short-term scheduling fix. Compare the cost of paid care with the wages, employer benefits, retirement contributions, career progression, and Social Security earnings you could lose. Also review paid leave, flexible-work policies, and caregiver benefits before making a decision that may be hard to reverse.

The emotional and physical toll matters

Caregiver health is not separate from the financial plan. AARP and the National Alliance for Caregiving report that 64 percent of caregivers experience emotional stress and one in five report poor health³. That’s why its important to plan for respite, backup care, and support for the caregiver, not just a funding strategy for the person receiving care.

How caregiving can affect your savings and retirement

Caregiving can put pressure on both sides of the household balance sheet as expenses rise and income potentially falls. While you may want to use emergency savings for a true short-term need, repeatedly using emergency or retirement funds for an open-ended care need can transfer financial risks from one family member to another.

The retirement gap caregiving can create

Reduced earnings, paused retirement contributions, and withdrawals from savings can compound over time. The caregiver may lose current savings, potential market growth, an employer match, and, in some cases, Social Security earnings. The right answer is not always to avoid using your savings and assets but to understand which assets are most appropriate, what risks the decision creates, and how the rest of your plan may need to change.

Practical steps to prepare financially for caregiving

Planning before a crisis can offer you more choices, but many families won’t start until only care is already needed. Start with what you know, identify the gaps, and make the next best decision. A useful plan connects care preferences, people, money, insurance, and legal authority.

Start the family conversation early

Early conversations with your family can help clarify the care a loved one would prefer, who is realistically able to help, how caregiving responsibilities and costs might be shared, and which income, assets, insurance, and public benefits may be available. Include the people whose time or finances may be affected and treat this as a series of decisions, not a one-time family meeting.

Build a family caregiving plan

Whether you are already providing care or expect to, take these four steps:

• Estimate a range of costs, not one number. Include in-home help, home modifications such as ramps and grab bars, adult day services, assisted living, and nursing care. Try to respect the person’s wishes, but test if they are realistic in terms of both time and money. Use local estimates because care costs vary substantially by geography and care setting⁴.
• Identify what to fund first. Separate resources belonging to the person receiving care from voluntary family contributions. Then decide how to use income, savings, insurance benefits, and other resources. Build any expected caregiver contribution into the budget rather than allowing it to become an unplanned drain on your family’s finances.
• Review coverage, benefits, and legal authority. Check health and long-term care insurance, eligibility requirements, benefit triggers, elimination periods, limits, and covered settings. Review workplace leave and caregiver benefits. Confirm that the proper financial and health care powers of attorney are in place.
• Revisit the plan as facts change. Update expected costs, available resources, care responsibilities, and contingency plans when health, work, or family capacity changes.

A plan can’t eliminate the difficulty of caregiving, but it can reduce avoidable surprises and preserve more choices when your family is under pressure.

How your financial advisor can help with caregiving decisions

Caregiving decisions rarely stay in one financial category. A decision to reduce work can affect your cash flow, employer benefits, taxes, retirement savings, Social Security, and insurance needs. Your advisor can help you understand those consequences and offer alternatives across your whole financial plan.

In Northwestern Mutual’s 2026 Planning & Progress Study, 58 percent of people who work with a financial advisor said they had planned financially for a loved one’s care, compared with 29 percent of those without an advisor¹. This comparison shows an association, not proof that working with an advisor caused the difference.

Your advisor can help estimate costs, test scenarios, and evaluate how savings, investments, insurance, and income strategies work together. The objective is to both protect the caregiver’s financial foundation and help the person receiving care retain dignity, control, and choices.

Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, and CFP® (with plaque design) in the United States to Certified Financial Planner Board of Standards, Inc., which authorizes individuals who successfully complete the organization's initial and ongoing certification requirements to use the certification marks.

Frequently Asked Questions

How much does caregiving cost a family per year?

There’s no single average that fits every family. Edward Jones’ Financial Impact of Caregiving study found caregivers who make unreimbursed contributions spent $8,737 a year in support of care recipients. Use that only as context. Build a family estimate from recurring expenses, occasional equipment or home modifications, travel, paid help, and the value of work or benefits that may be lost.

Can caregiving affect my retirement savings?

Yes. The effect may include lower contributions, loss of an employer match, withdrawals, reduced investment growth, and lower lifetime earnings. Compare your current retirement projection with realistic caregiving scenarios before committing to a major change.

Should I quit my job to care for a family member?

Treat leaving work as one option, not the default. First review leave and flexible-work policies, caregiver benefits, and ways to share or purchase care. Compare the cost of paid support with the earnings, benefits, retirement contributions, and career momentum you would give up.

How do I talk to my family about caregiving costs?

Start with care preferences and the facts the family knows today. Clarify what the person receiving care can afford, what insurance or benefits may apply, who can help, and who has legal authority. End with assigned next steps and a date for the next conversation.

Does insurance cover the cost of caregiving?

Coverage depends on the policy, service, and eligibility rules. Medicare generally doesn’t pay for long-term custodial care, although it may cover qualifying skilled nursing, rehabilitation, home health, and other medical services⁵. Review health and long-term care policies for benefit triggers, covered services, elimination periods, limits, and provider requirements.

When should I talk to my financial advisor?

Ideally, before making a major change such as reducing work, committing to ongoing paid care, or using retirement assets. If care has already begun, bring estimated costs, insurance documents, workplace benefits, and current savings goals so the advisor can help evaluate specific tradeoffs.