Providing care for an elderly relative can come at a significant financial loss of income, new research has found, and the fall in earnings can hit during peak pension saving years.
The average monthly loss of income comes in at £522, which equates to £6,268 per year.
Most affected are the so-called ‘sandwich generation’, middle-aged adults, often in their 40s to 60s, who are ‘sandwiched’ between caring for their own dependent children, or young adults who may be living at home, and their ageing parents.
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Caring duties can involve providing financial, emotional, or physical support, in a situation increasingly common due to longer life expectancies and people having children later.
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This squeezed group juggles responsibilities like managing their children’s schooling and parents' complex health needs, often while working full-time, leading to significant time and financial strain.
In many cases full-time work becomes impossible. Among unpaid carers of elderly relatives, nearly four in 10 have either stopped working altogether (9%) or reduced their working hours (28%) in order to provide support, a survey of 45 to 75 year old carers by retirement firm Just Group found.
Among those who are the sole carer for an elderly dependent, the figures are even higher, with 14% leaving the workforce and a third (33%) cutting back on their hours.
Emma Walker, director at retirement firm Just Group, said: “We’re familiar with the physical and mental toll the ‘sandwich generation’ face as they are squeezed between work, supporting children and caring for ageing parents. What isn’t thought about so often is the financial and professional price this generation pays for caring.”
What are the hidden costs of caring responsibilities?
Many unpaid carers are suffering significant cuts to their regular monthly income as a result of reducing their working hours, Just’s research found. On average unpaid carers are losing £522 a month, which equates to £6,268 per year.
Around one in seven (14%) respondents said their monthly income had reduced by more than £1,000 a month due to providing care.
Out-of-pocket expenses from caring responsibilities – which range from travel costs to picking up the bill on everyday shopping – are another pressure on carers’ finances. These hidden costs can add up to an average of £100 per month, with more than one in 10 (11%) spending more than £200 every month.
This informal at-home care is saving the taxpayer tens of thousands of pounds. Industry estimates for self-funders put the cost of a single year of residential care at £66,456.
Walker added: “Many people scale back their working hours and some leave the workforce altogether in order to meet their caring commitments – with the knock-on effect that, on average, their income is reduced by hundreds of pounds every month.
“This often coincides with the period in their careers when people reach their peak-earning potential, a point at which many may have planned to use spare income to build up pension pots and pay off the mortgage.
“Of course, many carers are glad to be able to take care of their family and don’t count the cost. But it’s important that people don’t overlook the impact stepping away from work can have on their financial future.”
Caring and the gender pension gap
Nearly 15 million people in the UK are not saving enough for retirement, according to analysis by the Department for Work and Pensions (DWP), signalling a system-wide engagement crisis. Women are disproportionately affected – known as the gender pension gap – often because of caring duties.
According to the 2021 Census, the latest data available, of the five million people providing unpaid care in England and Wales, three million (59%) are women.
Women’s typical lower earnings (the gender pay gap), employment gaps and part-time work due to child rearing, and their disproportionate burden of unpaid care for family members, all play a role in women having on average much smaller pensions, as do gender stereotypes and the ‘mental load’, according to a recent report.
The University of Edinburgh study warns women are retiring with far smaller pension pots due to these structural inequalities. Department for Work and Pension (DWP) figures show that by age 59 men hold a median amount of £75,000 in defined contribution (DC) pension wealth – the most common type of private workplace pension – compared to £19,000 for women.
The report – in conjunction with wealth manager Evelyn Partners, which seeks action to tackle the retirement ‘gulf’ – calls on the financial services sector to recognise the hidden systemic, social and situational factors preventing women from saving and planning for later life, rather than focusing on their perceived ‘lack of confidence’ in financial planning.
Tobi Schneider, fintech sector lead at Edinburgh Innovations and Compassion in Financial Services Hub, co-director, said: “With an ageing population, without action, we are sleepwalking into financial disaster for a large proportion of people.”
Women are 12 times more likely than men to take a career break to raise children, according to Scottish Widows’ annual Women and Retirement Report 2025 – leading to a potential pension gap of £113,000 (32%) an increase since the previous report when it was £100,000 (30%).
