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Give Caregivers Credit Toward the Retirement Security

that They Have Earned

Social Security is the bedrock of economic and retirement security for millions of Americans. In
2011, our Social Security system kept more than 21 million people out of poverty
i
. Social
Security is particularly important to both women and people of color. Instead of cutting our
Social Security system, we should strengthen it, and make sure that it works even better for
everyone, and in particular for those who rely on it the most. One way to strengthen Social
Security is through the creation of a caregiver credit, which would recognize the critical work
that unpaid caregivers do when calculating Social Security benefits.
A Caregiver Credit Would Help All Families

Caregiving is an essential element of family life and a vital service for children, the ill, the
disabled, and the elderly. Many of us will rely on family members to forego work in order to care
for us throughout the course of our lifetimes. Yet taking time out of the workforce to care for a
family member and loved one can severely impact family economic security, both during the
time a caregiver must reduce time in paid employment, and later in retirement. . The formula
used to calculate Social Security benefits is based on a workers highest 35 years of earnings. As
a result, because of lowered earnings or fewer years in the paid workforce, unpaid caregivers
receive fewer Social Security benefits when they retire. The establishment of a caregiver credit
would bolster the economic prospects of unpaid caregivers and would provide vital retirement
security to vulnerable populations, especially women and low-income families.
A Caregiver Credit is Particularly Important for Women

Women are at greater risk of economic insecurity in retirement than men. This is the result of
having more limited employment opportunities, lower wages, interrupted work histories, fewer
sources of retirement income, and having a longer life expectancy. All of these factors contribute
to women being more heavily reliant on Social Security while receiving lower average annual
social security income than men, with women receiving $12,520 compared to $16,398 for men in
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2012
ii
. The fact that women disproportionately take time out of paid workforce to care for loved
ones is a significant factor in reducing womens ability to have sufficient retirement income.
In 2009, 65.7 million Americans provided unpaid caregiving services to family
members
iii
.
On average, caregivers have spent 4.6 years providing care
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. 57% work at least part-time
in addition to providing care
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.
Women make up 66% of unpaid caregivers. This contributes to women averaging 32
years in the workforce, compared to 42 years for men
vi
. Since Social Security
benefits are based on the 35 highest years of earnings, women (and men) who do not
have at least 35 years in the workforce will have reduced Social Security income in
retirement.
Older women are less likely to have retirement income, such as a pension fund, and have
lower savings due to lower earnings. As a result, they are more reliant on Social Security
in retirement.
How a Caregiver Credit Would Work

A caregiver credit would ensure people who provide unpaid care to a loved one will not be
penalized in retirement. This would strengthen retirement security and support individuals as
they provide important and needed caregiving services. A caregiver credit would:
Provide an earnings credit in the Social Security benefit calculation while an individual
was caring for a child under a certain age, a disabled family member, or a senior in need
of care.
Only those earning less than a set maximum level of income would qualify.
A caregiver credit will increase the retirement income from Social Security to those who have
had to reduce their labor force participation and earnings due to caregiving, and would provide
the most benefit to lower income workers.

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aul n. van de WalLer and Arloc Sherman. CcLober 16, 2012. !"#$%& !(#)*$+, -((./ 01 2$&&$"3 45(*$#%3/ 6)+ "7
8"9(*+,: 4 !+%+(;<,;!+%+( 43%&,/$/. CenLer on 8udgeL and ollcy rlorlLles.
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Soclal SecurlLy AdmlnlsLraLlon. March 2014. !"#$%& !(#)*$+, $/ =5."*+%3+ +" >"5(3. Soclal SecurlLy
AdmlnlsLraLlon. hLLp://www.ssa.gov/pressofflce/facLsheeLs/women.hLm
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naLlonal Alllance for Careglvlng and AA8. 2009. Careglvlng ln Lhe u.S. 8eLhesda, Mu: naLlonal Alllance for
Careglvlng, and WashlngLon, uC: AA8
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