The Wrong Savings Fix for Caregivers
New Bipartisan Proposals Prioritize Managed Fees Over Household Flexibility
Executive Summary: The Mismatch of Caregiver Finance
Current legislative efforts to close the “caregiver gap”—specifically the Improving Retirement Security for Family Caregivers Act and the Catching Up Family Caregivers Act—rely on a fundamental misunderstanding of household economics. By focusing on increasing contributions to managed retirement accounts, Congress provides a windfall for investment firms while ignoring the practical needs of families.
The Savings Paradox: It is fundamentally illogical to “motivate” additional retirement savings at the exact moment a caregiver’s income has dropped or disappeared. Policy should instead focus on increasing general IRA contribution limits during high-earning years and creating parity between IRA contributions and 401(k) contributions.
The “SECURE” Playbook: Like the SECURE Acts 1.0 and 2.0, these new bills prioritize keeping assets locked in high-fee, firm-sponsored plans rather than facilitating debt reduction or flexible liquidity.
The Liquidity Penalty: Caregivers are often forced to raid retirement accounts for survival, yet the tax code continues to punish them with penalties. A superior approach would replace tax penalties with a cap on allowable pre-retirement distributions to protect core balances while allowing emergency access.
The Mortgage Priority: For many households, mortgage elimination provides far greater retirement security and tax-free cash flow than a marginally larger, volatile, and fully taxable retirement account.
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Current Legislative Proposals
Two primary bipartisan bills, reintroduced in April 2026 by Senators Mark Warner (D-VA) and Susan Collins (R-ME) along with Representatives Brittany Pettersen (D-CO) and Maria Elvira Salazar (R-FL), represent the latest attempt to fix the retirement gap through asset accumulation:
