Closing the Retirement Gap After Caregiving
Taking a break from your career to care for a loved one is one of the most meaningful choices you can make. But while caregiving brings purpose, it can also create financial challenges, especially for retirement. Time away from work often means a pause in contributions, missed employer matches, and less time for your money to grow.
If you’ve stepped back to provide care, you’re not alone. Millions of Americans take time away from work for caregiving responsibilities every year, and many later wonder how they can make up for lost savings. The good news is that with thoughtful planning, you can rebuild.
Below are some strategies that can help you close the gap and regain confidence in your financial future.
Why Caregiving Can Often Create Retirement Gaps
When you leave work to provide care, you often lose out on:
- 401(k) contributions: Money taken from your paycheck and saved for retirement.
- Employer matching: Money that many companies add to your 401(k) as an incentive.
- Years of compounding: The longer your money grows, the more powerful compound interest becomes.
A year or two away might not seem like much, but multiple years have the potential to leave your nest egg noticeably smaller. Recognizing the gap is the first step, taking action can help close it.
1. Boost Savings with Catch-up Contributions
One of the best ways to recover after caregiving is to take advantage of IRS catch-up contribution rules. If you’re over 50, the IRS allows you to contribute extra to your retirement accounts each year. This is designed to help people who may have taken time off or started saving later in life.
- In 2025, the standard contribution limit is $23,500.
- If you’re 50 or older, you can contribute an extra $7,500.
- For IRAs, the annual limit is $7,000, plus an additional $1,000 catch-up for those 50+.
Tip: You can contribute to BOTH a 401(k) and an IRA in the same year.
Even if you can’t max out these contributions right away, putting in as much as you can now and increasing your contributions over time can make a noticeable difference. The combination of catch-up contributions and compounding growth can help close the gap that caregiving may have created.
Tip: Review your current contribution level and increase it as much as your budget allows, even a 1-2% in your salary can help.
2. Rollovers and Considering IRAs
If you’ve changed jobs, you might have several retirement accounts scattered around, like old 401(k)s. With Americans averaging 12 job changes over their careers, it’s easy for savings to end up spread across multiple accounts. Managing them separately can feel confusing and make it harder to keep your retirement on track. That’s where consolidating accounts into a single IRA can help.
By bringing your accounts together, it can become much easier to see your total retirement savings, monitor your investments, and adjust them as your retirement goals evolve. Some IRAs, such as Traditional or Roth accounts, sometimes offer unique tax advantages and a broader range of investment options compared to workplace plans, which can make a meaningful difference over time.
Once your accounts are consolidated, you can make the most of annual contribution limits. For 2025, IRAs allow contributions up to $7,000, with an extra $1,000 if you’re 50 or older for an additional savings boost. This provides a practical way to catch up on missed savings during your career break and help grow your retirement nest egg.
3. Don’t Miss Out On Employer Matching
Once you return to work, don’t overlook employer contributions. Employer matching is essentially a retirement boost your employer puts in your savings on top of your own contributions, up to a certain limit. Missing out on this match is like leaving cash on the table.
Even if you can only contribute a small amount at first, make sure you’re at least capturing the full match. Over time, employer contributions can significantly accelerate your savings. Combined with catch-up contributions and smart investment choices, this strategy can help close the retirement gap more quickly.
Tip: Check out your employer’s policy and adjust your contributions to capture the maximum match available.
