PensionBee Finds Career Break for Caregiving May Cut Retirement Savings by Nearly $346,000

NEW YORK, Oct. 14, 2025 (GLOBE NEWSWIRE) -- A five-year career break to provide care for children or aging parents can cost workers nearly $346,000 in retirement savings, according to new analysis from PensionBee. 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.

A Perfect Storm

The Carer’s Gap does not occur in isolation. Factors like the Wage Gap can make it difficult to save consistently or to make up for the difference later. According to data from the Bureau of Labor Statistics, women earn $1,005 weekly ($52,260 annually) compared to men's $1,202 weekly ($62,504 annually), a difference of over $10,000 per year. Lower lifetime earnings mean reduced retirement contributions, diminished employer matching, less likelihood of saving, and smaller Social Security benefits.

Previous PensionBee research found that women are nearly twice as likely as men to have alarmingly low retirement savings, with 38% of women reporting less than six months of savings compared to just 23% of men.

Strategies to Close the Gap

The Carer’s Gap doesn’t have to derail retirement. PensionBee recommends these strategies to offset the impact:

• Catch-Up Contributions: If you’re over 50 you can make extra contributions to retirement accounts each year. 2025 Limits:
  • Extra IRA contribution: $1,000 (total: $8,000)
  • Extra 401(k) contribution: $7,500 (total: $31,000)
• Account Consolidation: Rolling old 401(k)s or IRAs from previous jobs into one account simplifies management while potentially also lowering fees.
• Maximize Employer Matching: When returning to work, try to maximize employer retirement contributions. Missing out on an employer match is essentially leaving extra money on the table.
• Save What You Can: Even small contributions during breaks can compound significantly over time.

"Retirement planning isn't linear for most people," added Savova. "Gaps can be offset with the right strategy, but completely disengaging is the mistake you can't afford to make."

About PensionBee

PensionBee (LON: BEE) is a leading online retirement provider, helping people easily consolidate, manage, and grow their retirement savings. The company manages over $8 billion in assets and serves over 275,000 customers globally, with a focus on simplicity, transparency, and accessibility. PensionBee offers Traditional, Roth, SEP and Safe Harbor IRAs built with portfolios powered by ETFs like SPY and MDY from State Street Investment Management, one of the world’s largest asset managers.

Notes

The information provided in this announcement, including any projections for investment returns and future performance, is for informational and educational purposes only and should not be considered investment advice. Past performance is not indicative of future results. All investments carry risk, including the potential loss of principal. PensionBee is not liable for any losses or damages arising from the use of this information. Projections and forecasts are based on assumptions and current market conditions, which are subject to change.

Media Contact:
Adela McVicar
SR PR Manager, PensionBee
adela.mcvicar@pensionbee.com

^{PensionBee Inc. is registered with the Securities and Exchange Commission as an investment adviser. We do not provide in-person advice. PensionBee Inc (Delaware Registration Number SR20241105406 ) is located on 85 Broad Street, New York, New York, 10004.}

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