43% of Twenty-somethings Are Already Caregivers, but Hidden Costs Could Be Quietly Wrecking Their Retirement

Caregiving used to be framed as a midlife problem. A worker in their fifties would step in to help an aging parent, often after their own kids were grown. The data tells a different story now, and according to the Transamerica Center for Retirement Studies’ Retirement Throughout the Ages: The American Middle Class report, 43% of twentysomethings and 41% of thirtysomethings are currently caregivers or have been during their working careers. The cost rarely appears in a retirement projection, but it is shaping outcomes for a generation that has not yet reached its peak earning years.

A Structural Cost That Standard Planning Ignores

Retirement calculators ask for income, savings rate, and expected retirement age. They do not ask whether a worker is paying for a parent’s prescriptions, taking unpaid leave to drive a sibling to chemotherapy, or covering rent for a grandparent. Yet that is the reality for nearly half of workers under 40. The Transamerica figures reframe caregiving as a structural feature of middle-class working life. When close to half of a cohort is absorbing time and money for someone else, the assumption that twentysomethings can dedicate their first decade of work to compounding their own savings is harder to sustain.

The strain is already visible in how this group is using existing accounts. For example, 55% of twentysomethings report trouble making ends meet, and 28% have already taken an early withdrawal from a 401(k) or IRA. Thirtysomethings are not far behind, with 23% having taken early withdrawals from retirement accounts as well. Early withdrawals before age 59.5 typically carry a 10% penalty on top of income tax, and they remove the dollars that benefit most from decades of compounding.

The Macro Backdrop Is Not Helping

The squeeze sits alongside broader pressure on household budgets. The personal savings rate has fallen from 6.2% in the first quarter of 2024 to 3.7% in the first quarter of 2026, meaning households across the income spectrum have less slack to redirect toward retirement.

Healthcare and housing together consistently account for about 35% of total personal consumption expenditures, and healthcare spending has risen from $3.43 trillion in January 2025 to $3.70 trillion in April 2026. Caregivers often absorb a portion of that healthcare bill personally, whether through copays, supplies, or lost wages. Consumer sentiment sits at 49.8 in April 2026, a level the University of Michigan considers recessionary.

How Far Behind The Numbers Suggest

The Transamerica survey puts median household retirement savings at $43,000 for twentysomethings and $54,000 for thirtysomethings. Fidelity’s age-based guideline calls for roughly 1x salary saved by 30 and 3x salary by 40. For a worker earning the equivalent of full-time hours at the April 2026 average wage of $37.41 per hour, the 3x-by-40 milestone is well above where the median thirtysomething sits today. Fidelity’s own plan data show the average Gen Z 401(k) balance at $17,000 and the average millennial balance at $80,700, with Gen Z early withdrawal activity at 46% across all retirement account types.

A Knowledge Gap On Top Of The Money Gap

Caregivers are also navigating this with little to no roadmap. Only 17% of twentysomethings and 18% of thirtysomethings say they have “a lot” of working knowledge about personal finance, and just 29% of thirtysomethings have a written retirement plan. The tax code already contains tools that caregivers can use: the Saver’s Credit for lower-income contributors, hardship distributions that avoid penalty in narrow circumstances, HSAs that double as retirement vehicles after age 65, and Dependent Care FSAs for qualifying expenses. Workers who do not know these tools exist cannot use them.

Considerations For This Cohort

For this group, caregiving is a recurring cost that arrives during the years when compounding does the most work. A few moves can blunt the damage, the full employer 401(k) match is generally the highest-return contribution available before other dollars are redirected elsewhere. Early withdrawals carry penalties and lost compounding that credit card balances do not. And building even a one-page written plan, which fewer than three in ten thirtysomethings currently have, turns caregiving from an unscheduled shock into a budget line that can be planned around.