Bipartisan Effort in Congress to Support Family Caregivers

There’s a new bipartisan initiative in Congress aimed at assisting family caregivers in saving for retirement more effectively.

Recently introduced legislation in both the House and Senate would simplify Roth IRA contribution regulations for caregivers. Additionally, another proposal is on the table that would allow caregivers of all ages to make “catch-up” contributions—these are extra contributions currently limited to workers aged 50 and above—into workplace retirement plans like 401(k)s. Family caregivers, who often support individuals facing illness, disability, or age-related challenges, are usually unpaid and may need to cut back on work hours or even take time off entirely.

“These two bipartisan bills will help give these individuals a better chance to build a secure financial future and ensure they are not disadvantaged for the critical care they provide,” said Sen. Susan Collins (R-Maine), who co-sponsored the bills.

The House version has been sent to the Ways and Means Committee, while the Senate’s has been directed to the Finance Committee.

Financial Impact of Family Caregivers

This new proposal reflects ongoing efforts by certain lawmakers to tackle the financial strains caregivers face, including their ability to save for retirement.

A recent report from the AARP Public Policy Institute estimates that long-term care costs could hit around $1 trillion by 2024, most of which comes from unpaid caregivers. A study revealed that about 78% of caregivers incur out-of-pocket costs, with an average annual expense of $7,242.

Interestingly, a separate study found that around 60% of caregivers are women, with an average age of 51.

It’s worth noting that women generally save less for retirement compared to men. According to Vanguard, the average amount held in a 401(k) for women across age groups is $126,971, while for men it stands at $171,859.

“Caregivers need all the help they can get,” remarked Cindy Hounsell, founder and president of the Women’s Institute for a Secure Retirement, a nonprofit advocating for women’s financial security, in support of the bills.

“Often, people have to leave their jobs to care for their parents, children, or in-laws,” she noted. “These bills are a step in the right direction.”

With an aging U.S. population, the need for caregiving is on the rise. As the baby boomer generation reaches retirement age, those aged 65 and older are projected to reach 61.2 million by 2024, which represents a 13% increase from 54.2 million in 2020, according to the Census Bureau.

Details on the Proposed Bills

Both bills aim to modify retirement account contribution rules for caregivers. The first measure allows eligible caregivers to contribute up to the annual maximum for a Roth IRA, even if their earned income is less. To qualify, caregivers must provide at least 500 hours of care annually while working fewer than 500 hours in paid employment.

Currently, IRA contributions in 2026 are capped at the lesser of $7,500 or a person’s annual income.

Caregivers may also be able to use existing benefits. If a caregiver’s spouse is employed, they could potentially set up a spousal IRA to save for retirement, assuming they file jointly and have sufficient earned income.

According to Paul Richman, government principal and political affairs director for the Insurance Retirement Association, the new bill borrows the spirit of a spousal IRA but is designed to be broader and more accommodating for caregivers who may not fit neatly into existing regulations.

The second bill permits individuals to make “catch-up” contributions at the highest permissible rate for eligible persons. If you’re 50 or older, you can currently contribute an additional $8,000 to a 401(k). If you’re between 60 and 63, that amount goes up to $11,250. The new legislation would enable caregivers, regardless of their age, to save up to that standard limit plus an additional maximum for five more years after returning to work.

Other proposed bills are also in the legislative works, including a bipartisan measure offering a $5,000 tax credit to working caregivers. Additionally, there is the Caregiver Cost Reduction Act, which would enable caregivers to use health savings accounts or flexible spending accounts for medical expenses of their parents or in-laws. These bills were introduced in March 2025 and are currently under consideration by the House Ways and Means Committee or the Senate Finance Committee.