A new survey has put a value of €60,112 on the work of a stay-at-home parent. From childminder and cook to cleaner, chauffeur and household manager, the role spans long hours and the countless tasks that keep a family on track.
Yet while the value of their work may equate to a full-time salary, the role of a stay-at-home parent is without pay, pension or financial protection. This makes a household’s “most valuable player” also its most vulnerable.
So how can you provide for the financial security of the stay-at-home parent and, if they get sick or die, enable your household to still function?
Valuing your ‘MVP’
The contribution of a parent who stays at home is grossly overlooked. It took professional networking site LinkedIn no less than 18 years to offer “stay-at-home Mom” and “stay-at-home Dad” as job titles. Is it any wonder this work goes undervalued?
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Part of the stay-at-home parent’s role is facilitating their partner to earn. But just because the person at home doesn’t bring in a pay cheque doesn’t mean they don’t add significant financial value.
“Replacing the work of the stay-at-home parent would come at a substantial cost and would require a range of different paid professionals to cover it,” says Karen O’Flaherty, senior propositions executive with survey authors Royal London Ireland.
The survey examines how adults in Ireland assess the monetary worth of parents who provide full-time care and household management.
Food shopping, meal preparation, transportation of children to activities, homework, doctor and dentist visits, facilitating the odd play date – it’s a hell of a job spec. Finding one candidate to fulfil all of it would be tough. Affording their salary is another matter.
When asked, adults in Ireland estimated the cost of replacing the work of a stay-at-home parent at €34,477 – a shortfall of more than €25,000 on Royal London Ireland’s calculation of the cost for the labour involved.
People aged 35–44 were the most likely to get it right. Women were nearer the mark too.
Men aged 18-24 and those over 55 were the groups least likely to estimate it correctly, lowballing the salary estimate at €20,000 –€30,000, or up to €40,000 off the mark.
The estimated annual cost of “employing” a stay-at-home parent has risen nearly 50 per cent since the survey began 10 years ago, says the insurer. Public perception of the cost has not kept pace, says O’Flaherty.
Protecting your MVP
Think about family protection policies and the focus tends to be on the person bringing in the salary, says O’Flaherty.
Some employees will have “death-in-service” cover as part of their job. This pays out a lump sum of about two to four times annual salary to beneficiaries if you die while employed. Some will have sick pay too, and income protection cover.
But what if the stay-at-home parent dies or gets sick in service? Without protection, there is no payout to cover their loss.
The working parent may have to scale back their paid work to take on caring responsibilities, or hire someone else to do it.
Many types of insurance policies pay out when someone dies but, as people live longer, we need to think more about “living benefits”, such as illness cover, that take care of us in the here and now, says O’Flaherty.
“If the parent who is at home becomes seriously ill, the family can really face substantial costs for childcare, household help, transport and adjustments to the home,” says O’Flaherty.
Taking out serious illness insurance for the stay-at-home parent is one option. For a monthly premium, the policy will pay out a tax-free lump sum on diagnosis of a serious illness. For example, your cover might pay out €60,000 if you get sick, or make a partial payment, depending on the illness, says O’Flaherty.
This would go some way towards paying for child-minding, cooking and cleaning, enabling the sick person to recover and the working parent to keep working.
“We all think we are invincible and nothing is going to happen to us,” she says. “Family and friends can help, but only for a certain amount of time.”
The premium will depend on your age, health, smoking status, the amount of cover required and length of the policy, says O’Flaherty. Policies are sold alone or offered as part of a life insurance or mortgage protection policy.
A policy won’t pay out for every illness, however, and that’s worth bearing in mind when assessing options. Specific cancers, heart attack, stroke, multiple sclerosis, Parkinson’s disease and Alzheimer’s disease are some of those included. Some early-stage or non-invasive cancers may be excluded, and the likes of back pain and musculoskeletal conditions aren’t covered either, says O’Flaherty.
Families with young children are arguably the most vulnerable if the stay-at-home parent gets sick.
You might argue these younger parents are least likely to get some of the illnesses specified. But cancer, accidents and circulatory system issues such as heart attacks, stroke and blood pressure are the three most common causes of death in Ireland for those aged under 55, says the Central Statistics Office.
When choosing an illness policy, look at the definitions of illnesses rather than the number covered, says the Competition and Consumer Protection Commission. Medical certs will be required to confirm the diagnosis matches the policy definition.
With some policies, your condition has to be extremely serious before you can make a claim, it says.
Life cover
Parents with dependent children might want to consider taking out life insurance. If the family relies on your salary, or the work you do in the home, this policy will pay out a sum if you die.
A partner working outside the home may already have death-in-service benefits through their job or pension plan – but not the stay-at-home parent.
For example, on the death of a stay-at-home parent who holds a term life insurance policy of €100,000 over 10 years, the policy will pay out €100,000 to their dependents.
Alternatively, partners could take out a joint term life insurance policy. This covers two people on the same policy and could pay out a lump-sum if either of you die – a joint term life policy, or if both of you die – a dual term life policy.
With joint cover, the insurance company will make a lump-sum payment on the first death – so only one payment is made and it is paid when the first person passes away during the policy term.
“You want the money to be paid out as quickly as possible, you don’t want it going into probate, so how you structure the product is very important,” says Kristen Foran, national sales director with Zurich Life.
With dual cover, the insurance company will make a lump-sum payment if you die and another lump-sum payment if your partner dies during the policy term.
Pensions
A stay-at-home parent can be particularly vulnerable in older age if they don’t have a pension.
Women are more likely to be in the stay-at-home parent role, and data published by Irish Life in 2024 found that, in Ireland, there was a 36 per cent gender pension gap. For every €100,000 a man has in their pension pot, a woman will, on average, have just €64,000.
To qualify for the State pension, a person needs to accumulate a certain number of PRSI contributions between starting work and reaching pension age. You’ll get them if you take parent’s leave and qualify for parents’ benefit and also if you take parental leave. Your employer must, however, write to the Department of Social Protection, setting out the weeks not worked so that you can get credited PRSI contributions.
If you take carer’s leave and qualify for carer’s benefit, you also get credits automatically.
In general, if you stop work to care for a child under 12, or an ill or disabled person aged 12 or over, one of two related schemes can help you qualify for the State pension.
The Homemaker’s Scheme allows people who took or take time out of the workforce after 1994 to care for children or dependent adults discount up to 20 years from their record under the old yearly averaging method of calculating State pension eligibility.
You must have worked at some point, and not earn more than €38 a week while caring, or more than €5,000 as a self-employed person.
Under the more recently introduced HomeCaring Periods Scheme, you can get up to 20 years of PRSI credits added to your social insurance record to help bring you closer to the 2,040 stamps needed for a full State pension under the newer total contributions approach for measuring pensions eligibility.
The 1994 cut-off does not apply but the weekly earnings limit is still in place.
The Department of Social Protection can tell you if you have sufficient contributions to qualify and you should let them know you want to be registered for the scheme.
“Make sure you do that, it won’t happen automatically, you have to go and ask for it, that’s really important for you to get your State pension,” says Foran. You can do this on Mywelfare.ie using your MyGov ID.
You can also buy PRSI credits voluntarily and you should do that too, if you can, to safeguard your State pension, she says.
Stay-at-home parents can be too reliant on their spouse’s pension, says Foran, so they should try to understand what’s there.
“Look at the annual pension benefit statement – what’s being paid in, what is it expected to grow to, ask yourselves: will this cover us both?” says Foran.
There is generous tax relief on pension contributions for those in paid employment. It makes sense, therefore, to max out the working person’s pension contributions first rather than start something for the stay-at-home parent who will get no tax relief.
Those aged 30-39 can contribute up to 20 per cent of their income a year into a pension, based on a maximum salary of €115,000, says Foran. For higher-rate taxpayers, every euro you contribute to your pension fund allows you to claim back up to 40 per cent in income tax relief.
For example, contributing €12,500 to your pension this year will only cost you €7,500. Standard rate taxpayers can benefit from 20 per cent income tax relief.
“There’s a lot you can do with your pension when you retire to look after a spouse too but, in the accumulation phase, it’s about putting as much into the fund as possible,” says Foran.
If the earner dies while still paying into their pension, its value should go to the spouse.
If the earner has already retired and dies, what happens to their pension depends on how they took their benefits on retiring, she says. If they bought an annuity, they could have built in a spouse’s pension to be paid after their death – but they may not have done this, in which case the pension may die with the earner, says Foran.
If the main earner sets up an Approved Retirement Fund (ARF), a type of investment vehicle, this can be transferred to a homemaker’s name on the earner’s death and the homemaker can withdraw money whenever they want, says Foran.
[ Approved retirement funds: What is an ARF and how much will it cost me?Opens in new window ]
“It may be the case that one spouse effectively saves in a pension for both of them with the intention of providing for both in retirement by setting up a spouse’s pension on death, or transferring to an ARF.”
A stay-at-home parent returning to work can try to make up for lost time with their own pension.
“You have extra tax relief on pension payments when you are older, so if you are taking up a job, have a really good look at the pension and what you can do to build up the years missed.”
