You never plan on losing a job, however, if you do find yourself in the midst of a redundancy, getting your finances under control helps reduce the stress on you and your family and helps avoid costly mistakes.
Research suggests one in three executives face retrenchment at least once in their career. Others opt for significant career changes, which often take time to pay off financially. But while these transitions are common, it doesn’t make the financial impacts easier to manage. And there are important choices to make.
First you’ll need money until you find another job. You could use your termination pay to fund your lifestyle costs for a while, and you may also consider selling down some assets. If so, which ones? Many people find it useful to set up a regular income from a cash trust to pay the bills while they get re-organised. Is this right for you?
You may be entitled to Centrelink benefits, but waiting periods and income and assets tests apply. You’ll need to understand exactly what you can claim and when.
If you’ve enjoyed benefits like life insurance, super contributions and employee share schemes, you’ll have decisions to make with these too. It’s easy to make hasty decisions that you may later regret.
Are you eligible to rollover your termination payment into super and, if so, should you? The tax paid on your termination payment may be lower and you’ll get the tax benefits of saving in super, but your money is locked away until you retire.
The good news is that most people can come out the other side of retrenchment or a career change better prepared to get ahead financially. Quality financial advice can help you make the right decisions, and reduce one of the key causes of stress during an unsettled period.
At Liberum Financial, we find that we add the most value when people come to see us while they are finalising redundancy arrangements and before they have left work.
Are you in the midst of a redundancy?
Talk with one of our advisers and make sure you make the most of your redundancy payment.