Day 29: Protecting Caregivers through Social Security

November 29, 2011

By John Jankowski, Research Analyst, Social Security Administration

Of the many effects that caregiving can have on the caregiver’s financial well-being, one of the most harmful—and often least discussed—is its effect on future retirement income. The typical caregiver spends a significant period of time outside of the workforce, which leads to a shorter work history and lower lifetime average earnings than those with uninterrupted work histories. As a result, caregivers often enter retirement with lower levels of private pension savings and, because Social Security benefits are based on the 35 highest years of indexed earnings (with anything less than 35 counted as ‘zeros’), a lower Social Security benefit as well.

Thankfully, Social Security’s spouse and survivor benefits (or “auxiliary benefits”) protect most caregivers by giving those with lower career earnings than their spouse a retirement benefit based on their spouse’s career earnings, rather than their own. Because of these benefits, many caregivers are able to spend a significant period of time outside the workforce and still receive a generous benefit (equal to 50% of their spouse’s benefit, or 100% if their spouse is deceased) from Social Security.

But what about the increasing number of caregivers—for example, those who have never married or were in marriages that didn’t last long enough to qualify for auxiliary benefits—who aren’t eligible to receive benefits based on the earnings record of a spouse? Unfortunately, the lack of any direct acknowledgement of unpaid caregiving activities in Social Security’s benefit calculation formula means that this group is in danger of reaching retirement with relatively low benefits and, consequently, a heightened risk of poverty in old age.

This lack of direct acknowledgement for unpaid caregiving in the US led me, in a paper published earlier this month, to look at how other countries help caregivers through their public pension systems. As with family policy in general, it should come as no surprise that Western Europe has led the way in protecting caregivers through a variety of measures in place within their pension systems. Among the most widely used of these policies are so-called “caregiver credits” (the focus of my paper), which, in most variations, replace years of zero earnings due to unpaid caregiving with a deemed wage determined by the government. In other words, years of caregiving are essentially awarded a salary when it comes time to determine an individual’s retirement benefit.

As I show in the paper, the specific design of caregiver credits varies significantly across Europe, with differences in the number of years an individual is eligible to receive the credits, how they are calculated, who is eligible to receive them (i.e., a mother, a father, or both), and whether the caregiver has to leave the workforce completely to be eligible. These differences have a significant impact on the number of individuals eligible to receive the credits, and, consequently, on how much they cost (a significant issue when considering their use in the US). Despite the wide variation in these programs across Europe, there is substantial evidence that these credits have significantly improved pension entitlements for caregivers (primarily women) in almost every country where they have been introduced.

As we continue to discuss reforms to the US Social Security system, it is important to focus not only on the financial sustainability of the system but also on ways to improve the adequacy of retirement benefits for the most vulnerable of our population. For this reason, policies that directly acknowledge unpaid caregiving activities should be given serious consideration as we look for ways to improve Social Security for the future.

Author’s note: The conclusions presented in this article are those of the author, and do not necessarily represent the views of the Social Security Administration.

Resources:

1) Jankowski, John. (2011) “Caregiver Credits in France, Germany, and Sweden: Lessons for the United States,” Social Security Bulletin, 71(4): 61-76.

2) SSA’s Research, Statistics, & Policy Analysis website:

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Day 29: Protecting Caregivers through Social Security by John Jankowski, Research Analyst, Social Security Administration is licensed under a Creative Commons Attribution 3.0 Unported License.

9 comments to Day 29: Protecting Caregivers through Social Security

  • Brenda

    A subject long overdue for consideration of some sort. I am in the mentioned catagory of not enough credits to take care of myself. I am 24/7 caregiver for my Mom. Therefore it looks like I will be completely dependent on Medicaid in my future unless something is changed. And there are so many others out there it opens a floodgate that will create more strain on the Social Security program down the road.

  • I have been taking care of both of my parents, but my mom just past in mid Dec 2011. It is very difficult to take care of my dad by myself; I work full-time, married, a son and two grandchildren. I had to take off for 2 weeks to take care of my mother’s finacial obligations and to make sure my dad’s paper work was in order. There needs to be a law for civilian employees, just like there are for veterans who have family caregivers who are being compensate. I will take care of my dad regardless; but why can’t other family caregivers be entitle to the same benefits of veterans family caregivers. My job is on the line, I have used all of my leave time and I know that our legislation can enact a better law than what we have on caregivers. Our government needs to make some alterations…

  • Hi Maria,
    Thank you for writing and I’m sorry to hear about your loss.
    Your post captures the need for laws, programs, government, and employers to catch up to the reality of caregivers and their situations in caring for parents. This need is only going to grow larger with 10,000 baby boomers turning 65 every day for the next 19 years (According to Pew Research). There does seem to be some growing anger/energy from people in the caregiving community, whether it’s Jane Gross’ column on Medicare not paying for home care; or the recent AARP Forum on Caregiving, where a doctor said that the current discharge process is a national disgrace and Jonathan Rauch suggested we “occupy elder care.” Thank you for writing,

  • The people that are full-time caregivers are facing an very grim future unless something is done to change the Social Security and Social Security Disability laws. I was a full-time caregiver for 6 years for my Mother with Alzheimer’s. She passed away in 2009. In 2011 I was diagnosed with Congestive Heart Failure one day and uterine cancer the next. My doctors recommended I apply for Social Security Disability. When I did I was DENIED benefits because of not having enough work credits in the past 10 years due to the 6 years I took off to be a caregiver. This is not right!!!! The law needs to be changed to acknowledge full-time caregiving, and not count the time taken off to do so against you if you happen to become disabled.

  • [...] implemented a caregiver tax credit in the US. The author of the report, John Jankowski, wrote a blog post about the report for FCA’s 30 Days of [...]

  • [...] implemented a caregiver tax credit in the US. The author of the report, John Jankowski, wrote a blog post about the report for FCA’s 30 Days of [...]

  • .stan morris

    I am saving the state a lot of money by caring for my mother that is 86 but it has cost me dearly, I have run my credit cards to alnost the limit I can’t get a job, the last time I started to find a job she feel down and now I’m putting up with buzzing in her ear. sometimes I feel like getting in the car and just keep driving. someone told me we were to get some kind of financial help I don’t know if it’s true or not,I could sure use it before I lose my mind also. Stan Morris

  • Sean Coffey, Policy Specialist

    Hello Stan,
    Thank you for writing. Does your mother qualify for Medicaid? Depending on the state she is in, in some cases she can “hire” you as her caregiver. This is not available in all states. Two places to start looking:
    1) Our Family Care Navigator (click on your state): http://caregiver.org/caregiver/jsp/fcn_content_node.jsp?nodeid=2083

    2) The National Resource Center for Participant-Directed Services also has an excellent map that lists consumer-directed (meaning your mom is in charge of her long-term care plan) programs in each state: http://web.bc.edu/libtools/insights-publications.php

    You’re also welcome to give us a call and we can talk you through some of these issues: 1-800-445-8106.
    Thank you,
    Sean Coffey

  • Beck

    I’m the only caregiver for my spouse. Took yrs for the Alzheimer’s diagnosis. He lost his job before the Dx & because of that we lost our health insurance. In the years since, I’ve become multiply disabled (cash-paid doctor agrees) but w/o expensive tests to PROOVE my disabilities, no SSI for me! I earned >39 pts, but <40 so I can't get Disability. When my spouse dies I'll be both crippled & homeless. Just a suicide statistic. This bill is excellent! (If men were usually the caregivers, this law would've already existed.)

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