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The findings come as many working mothers leave the U.S. workforce, reversing gains in labor force participation made after the pandemic. The Brookings Institution observed that women with children under five have been most affected, with labor force participation rates falling from 71% to 68% since September 2023. In contrast, women of prime working age remain in the labor force at a steady rate of 81%. The widening gap signals that caregiving pressures are once again pulling mothers out of the economy—reviving concerns about long-term financial security for women who make up the majority of caregivers.
The Compounding Cost of the Carer’s Gap
Access to an employer-sponsored plan, like a 401(k), is one of the primary ways that Americans save for retirement. PensionBee’s analysis modeled a hypothetical investor who pauses retirement contributions for a one, three, or five-year period. The results reveal an unmistakable penalty for a natural part of life, highlighting the toll on lifetime wealth and the existence of the Carer’s Gap.
PensionBee’s study assumes the following:
- $5,000 annual contributions to a 401(k) beginning at age 25
- Consistent contributions before and after a Carer’s Gap
- 6.15% average annual return (7% market growth minus 0.85% annual fee)
- Retires at age 62, after 37 years of total saving
- All figures in 2025 dollars (inflation-adjusted)
Table: Impact of the Carer’s Gap on Lifetime Retirement Savings
PensionBee’s findings reveal the critical role of retirement contributions in building lifetime wealth and show how lost compounding can sharply reduce their impact.
Even a one-year gap in retirement contributions, equal to $5,000, can result in compounded losses of nearly $79,000 in savings over a career. The penalty grows significantly with longer breaks: a three-year gap creates a $221,000 shortfall, while a five-year gap results in retirement savings of $830,000, a staggering $346,000 less than those who never interrupted their contributions and end up with $1,176,006 at retirement.
"As the default caregivers, women are usually shortchanged,” said Romi Savova, CEO of PensionBee. “Caregiving is a real-world trade-off that should be considered in financial terms, beyond just the period of care. The Carer’s Gap is a costly retirement phenomenon.”
Women make up the majority of family caregivers, taking time off not just for childcare but also to care for spouses, aging parents, and family members. Caregiving often comes with extra expenses like doctor visits, therapy, home modifications, and other unexpected costs.
All these financial responsibilities can make it harder to prioritize saving, and taken together, can leave women with smaller nest eggs compared to men.
