Family Caregivers Could Have Brighter Retirements If Feds, Employers Take Four Steps Says GAO

Family caregivers could have brighter retirements if the federal government and/or employers take four steps, the Government Accountability Office said in a report released Friday.

Senate Aging Committee Chair Susan Collins asserted the study provides “foundational work” to help Congress work towards aiding the long-term financial security of caregivers.

Caregivers often face perilous finances in retirement because many take time off of work for their family duties which can cost them money from lost wages, employer retirement plan contributions and reduced Social Security benefits.

On average, women and men caregivers have 37 to 54 percent less in Individual Retirement Accounts and non-IRA assets than non-caregivers, according to the report.

GAO, a research arm of Congress, pointed out some family caregivers may stop saving for their own retirement or tap into their retirement savings to pay for out-of-pocket expenses to help a loved one.

To reduce out-of-pocket expenses, the agency said the government could allow early withdrawals from Social Security benefits and tax-free withdrawals from retirement accounts to pay for these costs.

Another approach, said the report, would be for the government to pay caregivers for their time.

The burden of out-of-pocket expenses for family caregivers could also be reduced with federal incentives for individual to purchase long-term care insurance for themselves.

In a second bucket of retirement aid for family caregivers, several measures could be taken to lengthen their time in the workforce.

GAO said one thing the federal government could do would be to provide employment discrimination protections for the caregivers and to allow workers to set aside pre-tax earnings for use when taking Family and Medical Leave Act leave.

Caregivers could also have more money for retirement by efforts to have them stay on their jobs longer such as allowing works to use sick days to care for family members to provide workers with access to paid family and medical leave and to give employees telework options and flexible schedules.

GAO said more caregivers could also stay on the job longer and reduce the retirement security threats to these duties by expanding Family and Medical Leave Act coverage to workplaces with fewer employees.

A third way to aid retirement security for family caregivers, said the report would be to expand the number of caregivers with retirement savings accounts and the amount of money in the accounts for caregivers who already have them.

GAO’s suggestions range rom reducing the eligibility and vesting requirements for employer-offered retirement plans to preventing employers from excluding part-time and temporary workers from retirement benefits to tying the earned income requirement for contributing to an individual retirement account (IRA) to income earned before becoming a family caregiver.

Retirement account savings could also become greater aids to family caregivers by providing them with additional opportunities to make catch-up contributions to the accounts, lower IRA fees to family caregivers and to require employers to contribute to contributing to qualified retirement plans when employees take unpaid leave under the Family and Medical Leave Act.

The fourth tactic GAO said could be used to improve retirement security for family caregivers would be to increase their Social Security benefits by providing Social Security credits for caregivers who take time off of work and to increase the Social Security special minimum benefit provided to long-term earners.

GAO also suggested cutting work requirements to enable people with shorter earnings histories to be eligible to receive Social Security benefits and reducing the number of years in the Social Security benefit calculation.

Benefits are based the highest 35 years of earnings on which a worker paid Social Security taxes.

In contrast to spousal caregivers, parental caregivers at or near retirement age don’t have lower levels of retirement assets or income than non-caregivers, the report pointed out.

The researchers found adults who care for their parents rarely find caregiving to be threatening to their retirement security compared to people who care for their spouses possibly because caring for a parent, unlike caring for a spouse, may be provided by multiple individuals, so the effect on retirement security may be distributed across siblings.

Another potential factor, said the report, is parental caregiving may not affect household income because married caregivers’ spouses may be able to continue working and offset any lost earnings.

To see the full study, click on: http://bit.ly/314tGRq