Carers Week: The financial impact of caring for a loved one
Chris Broome – Chartered Financial Planner
Across the UK, 6.5 million people provide informal care for a family member or friend. This care is hugely important for ensuring vulnerable people receive the support they need.
However, delivering care presents challenges for carers too – mentally, physically, and financially. Recent research highlights the financial toll of caring for someone.
The 7 June marks the start of Carers Week. This annual campaign raises awareness of the challenges that unpaid carers face, as well as recognising the contributions they make to families and communities.
If you’ve started caring for someone, you can face many difficult emotions and decisions. It may also mean you overlook its financial impact.
Nearly 3 in 10 carers reduce their working hours or stop work altogether
While many carers continue to work alongside providing care, juggling both can take a toll. Almost three in ten (28%) carers aged between 45 and 64 have made changes to their work due to their caring responsibilities, according to Just Group research. This could be for a range of reasons, from the care needs of the person being supported changing, to the carer struggling to manage both commitments.
On average, the research found a carer’s income falls by £6,200 per year, and this amount of income loss increases with age. It’s an issue that could become more widespread as many people are putting off making a care plan.
Previous research from Aegon found that just 7% of people consider planning for possible social care costs as a financial priority. It could mean an even greater number of people become reliant on the support of family and friends.
If you’re a carer, what steps can you take to secure your finances?
Set out a short-term budget
If you’re caring for someone, budgeting is likely to be the last thing on your mind. However, it can help you understand the impact it may have. Even if you’ve not changed your working hours, you may need to factor in other costs, such as increased petrol if you need to travel more.
Reviewing your budget regularly can help you understand whether you need to adjust your day-to-day spending or if it’ll have an impact on your medium- and long-term goals.
Check if you’re eligible for National Insurance credits
If you need to give up work, whether temporarily or permanently, it could affect your State Pension.
To receive the full State Pension, you must have 35 qualifying years on your National Insurance record. If you stop work, you may not achieve this, and you could receive less in retirement. However, if you are caring for someone for at least 20 hours a week, you could get Carer’s Credit, which can help fill in the gaps on your National Insurance record.
The person you’re caring for must receive one of the following for you to be eligible for Carer’s Credit:
- Disability Living Allowance care component at the middle or highest rate
- Attendance Allowance
- Constant Attendance Allowance
- Personal Independence Payment – daily living component, at the standard or enhanced rate
- Armed Forces Independence Payment.
If applicable, claiming a Carer’s Credit can help make sure your retirement stays on track while you’re providing care.
Contact your local authority for a carer’s assessment
Caring can present many challenges, and in some cases, your local authority may be able to offer support. You should contact your local authority’s services department to request a carer’s assessment. During an assessment, you’ll talk about the care you provide and the impact it has on your life.
You may be entitled to a personal budget to cover the needs identified in the assessment. This is means-tested, but if you’re eligible it could help pay one-off and ongoing costs, such as adapting your home or employing care workers to provide some support.
As well as financial support, a carer’s assessment can lead to help in other areas too. They may be able to offer respite care so you can have a break or put you in touch with local support groups, for example.
Consider the long term and discuss options with your loved one
Discussing the care you provide and how it may change in the future with the person you’re caring for can be difficult. However, it’s a step that can provide you with more certainty about the future while ensuring they’re not left in a vulnerable position.
If, for example, their care needs were to increase, would you be able to provide this or would you need further support? Considering different scenarios can help you understand the impact caring could have on your long-term finances and understand what your loved one’s preferences are.
Don’t put off seeking advice
Financial concerns can be a huge source of worry. If you’re not sure about the impact caring could have on your finances, seeking advice can help.
Talking to a professional about your current circumstances and your long-term goals to put a plan in place can be a weight off your shoulders, allowing you to focus on providing care and living your life.
Please contact us if you’d like to discuss how the cost of becoming a carer could affect you.