Parental Care at Midlife: Balancing Work and Family Responsibilities Near Retirement

Abstract

The costs of providing care informally at home to frail elderly persons can be substantial, especially if caregivers are forced to interrupt their careers or retire early when they provide care. This report describes findings from a recent Urban Institute study of the characteristics of persons in their fifties and early sixties who provide care to their elderly parents and the trade-offs that families face when they divide their time between the provision of informal care and paid work. Estimates were based on a sample of men and women between the ages of 53 and 65 in the 1994 and 1996 waves of the Health and Retirement Study. Only 11 percent of women and 6 percent of men at midlife devoted more than 100 hours per year to assisting their parents in 1994 with personal care, chores, or errands. However, for those who did provide informal care the costs were high. Results from simultaneous panel data models indicated that women who assisted their parents reduced their annual labor supply by 459 hours, which translated on average to about $7,800 in pre-tax lost earnings per year in 1994 dollars. The estimated effect was almost identical for men, who reduced their labor supply by 462 hours when they helped their parents. Although some proposed legislation would compensate caregivers for lost earnings and benefits with tax and Social Security credits, it is difficult to design policies that narrowly target those who reduce hours of work to help their parents.