A $7,242-a-year personal cost that consumes 26% of income is now the hidden tax on caregiving

Caregivers are spending an average of $7,242 per year out of pocket — the equivalent of 26% of their income — to care for a loved one. This is not incidental spending. It is a structural transfer of wealth from family balance sheets into the gaps of America’s long-term care system. And it is happening at scale.

Sixty-three million Americans — nearly one in four adults — provided ongoing care for an adult or child with a complex medical condition or disability in the past year. Nearly one in four of them spent more than 40 hours a week on caregiving, and one-third have been doing it for five years or more. The work is not temporary. It is not episodic. For millions, it is a second, unpaid job with no end date.

The financial toll begins with direct expenses. The average caregiver spends $7,242 annually, according to AARP. For those caring for someone with Alzheimer’s or dementia, that figure climbs close to $9,000. Among working caregivers who report two or more work-related strains — such as cutting back hours or leaving the workforce — the average jumps to $10,525 per year.

The damage compounds over time. Nearly half of caregivers experience at least one major financial consequence: stopping retirement savings, taking on debt, or being unable to afford basic needs. Caregivers who begin early in life face 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. Women bear a disproportionate burden, losing a median of $24,500 in wages over two years when providing intensive care for their mothers.

This cost exists because the system is designed to offload responsibility. Medicare does not cover long-term custodial care. Medicaid steps in only after assets are depleted. The $1.01 trillion in unpaid labor provided by caregivers exceeds total federal and state Medicaid spending in 2024. The value is captured. The cost is not shared.