Take control of your redundancy recovery plan
There is no question that redundancy is a major disruption in life and one which can take a significant toll on your plans. Those facing redundancy deserve support and guidance in what is such an emotionally and financially challenging time.
Redundancy is an unpleasant fact of life in many businesses, particularly when facing uncertain and difficult economic times.
Tough economic times are being felt in many sectors of the economy and redundancy remains an all-too-common possibility for employees of both large and small businesses.
No matter how you are feeling about your redundancy, know that you are not alone.
1 in 4 Australians have been made redundant.1
The fact that redundancy is so common, however, doesn’t lessen the impact it has and doesn’t make it any easier to make tough decisions.
For some, redundancy can be a real blow to their self-esteem and confidence, especially if they have been happily settled in the same job for many years. Others may see it as an opportunity to change their career or lifestyle, or a way to transition to retirement more rapidly.
Whatever your situation, facing redundancy is a unique experience that requires careful planning. There are steps you can take to handle the financial challenges and put you in a position to face the future with optimism.
4 steps for an effective Redundancy Recovery Plan
1. Take the time to emotionally recover
There is no doubt that redundancy can be an unsettling and often stressful experience. For those who take redundancy as a blow to their confidence and self-worth, it is important to take the time to process your emotions.
Start by taking practical steps as soon as possible to build momentum and focus on the future, rather than on the past. It can be difficult not to take things personally, but the important fact to remember is that it is the job that has been made redundant, not you.
Focussing on what is in your control can help activate the emotional recovery process.
It is also important to seek help if you are struggling. Consider seeking professional counselling or talk your situation and feelings through with friends and family.
2. Consider your next steps
The good news is there are always possibilities and opportunities to come out of redundancy.
There are 4 main options you can take after being made redundant:
- Look for a similar role;
- Move into a new role – or consider setting up your own business;
- Take a break – depending on your financial situation, consider taking a break from working or a holiday;
- Take early retirement – depending on your age, this may be achievable with a transition to retirement strategy.
The best option for you will depend on your personal and financial circumstances. A financial adviser can help determine if early retirement is a good option for you based on your goals and finances.
3. Make the most of your redundancy payout
One of the greatest concerns for those facing redundancy is the financial and taxation issues of dealing with their redundancy payout. Ultimately, the goal is to get the most out of your payout and avoid any tax losses.
When going through redundancy, many people become overwhelmed with the situation and can avoid making financial decisions. However, these decisions could cost you thousands in lost tax-saving opportunities and poor investment choices.
According to the ATO:
“Certain redundancy payments are tax-free up to a limit based on the number of years you worked for that employer.”
However, there are many different circumstances and steps you should take to ensure your payout is used wisely and for maximum returns.
By acting quickly and seeking advice, you can better position yourself to recover from the challenges of redundancy and simultaneously turn uncertainty into opportunity.
4. Plan your finances
Aside from your redundancy payout, it is important to plan for other aspects of your finances too.
A redundancy can interrupt your plans for the future and may leave you with financial challenges to plan for.
No matter what your financial situation, a big life change such as a redundancy will likely require changes to your financial plan. So, seek support and advice from a financial planner that you can trust to help you make informed financial decisions, that are protecting you for the future.
Making the wrong decisions at a time of redundancy can be very costly and may impact your financial future.
At Central Coast Financial Planning Group, we use a redundancy planning approach that can identify areas of financial concern in your personal situation and give you effective and positive strategies that may assist you to:
- Utilise tax-effective approaches to payments;
- Identify Centrelink entitlements;
- Manage your living expenses;
- Protect your loved ones;
- Empower you to make the appropriate investment decisions.
- Our Central Coast Financial Advisers are experienced in redundancy financial planning and can help you plan ahead for the secure future you deserve.
Want to know more about how we can help you?
DISCLAIMER: The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice. Newcastle Financial Planning Group, Central Coast Financial Planning Group and Sydney.