We are all becoming 'carers'. According to government figures, some 5.8 million people in the UK have caring and support responsibilities, while 1.4 million people are caring for someone 24 hours a day. Increasingly parents are finding that no sooner have their children left home and they are free of their caring responsibilities, than their ageing parent needs help.
This 'sandwich generation' is heading for a pensions nightmare.
Impact of caringIn many cases caring responsibilities have a major impact on careers. Parents of children born with disabilities may find themselves caring for their child for the rest of their lives, so there's no alternative to a life on benefits. The main carers' benefit, Carer's Allowance, is £58.45 for a minimum of 35 hours - equivalent to £1.67 an hour, and is currently received by 600,000 people.
Even when children are born without disabilities, parents take a huge hit in income terms. Many parents (often the mother) will take time off before the children go to school - partly because the cost of childcare means it doesn't make economic sense to work. Even after they start school, picking up and dropping off means that some 50% of women in their 30s work part time.
It's hardly surprising that according to The Money Advice Service, one in five carers say they cannot put aside any money for the future, and a quarter have had to cut back on the basics just to make ends meet.
This has a devastating impact on their preparations for retirement. It means that many women will have been working part time from the age of 30 until retirement, so in many cases they have fewer than ten years of pensions savings under their belt. It's hardly surprising that 60% of women aren't putting aside enough money for their retirement (compared to 51% of men).
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What can you do?1. Ensure you are entitled to the full state pension
You need 30 years of National Insurance contributions to receive a state pension. Any less and you will only receive a proportion of it.
For those caring for others with disabilities, you will receive contributions for the years you were caring if you were receiving Carer's Allowance, Jobseeker's Allowance or Employment and Support Allowance. If you weren't on any kind of benefit, however, you will need to claim the Carer's Credit.
For those caring for children, if you receive child benefit you will automatically receive NI credits for the years you have received this. If your partner is on £50,000 or more and you have opted out of the system, you may need to complete a form on the HMRC website to claim the credits.
2. Save what you can now into a private pension
It may seem like an impossible stretch, but it's nothing to the stretch you'll find when you're living on a state pension. It makes sense to draw up a budget planner to see where you can make space in your spending. There are some easy wins to be made too, such as switching utilities and downgrading your supermarket brands, which will save without sacrifice.
3. Plan for what work will you be able to do for longer?
For many people, working on beyond 65 will be the most sensible option. It's worth planning in advance for this, however, to ensure you are in a position to work when the time comes.
Can you get training or experience now for a career you can do longer? Can you make a decision on the kind of work you would be happy doing in your 60s and possibly some of your 70s? Would you take care of pets, do jobs round the house, do home-selling, or consider a job in retail? Are you interested in starting a business?
4. Consider your property
If you own your own home, then you are likely to have some equity that you can take advantage of. Some people will be able to sell up for a smaller property in a cheaper part of the country, others will choose equity release (although it's important to understand all the ramifications of that). Your property is not the answer to all your problems, but it has the potential to make a big difference.
Some 9% of people rely on their family for some income in retirement. This may mean talking to them about your expectations in advance and reaching agreement on the kind of help you can expect. In some instances you may be able to move in with family to free up equity, or they could move in to the family home and in return pay your expenses.