It is not just in turbulent economic times that people lose their jobs.  Redundancy and the unexpected loss of your job can happen at any time.  Many people focus on the financial impact and scurry to find the next job, but you also need to be aware of the emotional turmoil.  Feeling distress is a natural response to being made redundant, particularly if it had been unexpected or where you have been in your job for many years.  (For more information about coping with the emotional implications of redundancy, download the ‘Taking Care of Yourself after Retrenchment or Financial Loss’ from the BeyondBlue website.)

Depending upon your age and other factors, there are two main paths after being retrenched: retirement, or finding a new job.  Both of these options have their own specific considerations.

1.  The Path to Retirement

Many people who are made redundant later in their working life find that it becomes a catalyst for their retirement.  This can either be by choice or due to difficulties in finding new employment.  Some people welcome this push into retirement, whilst many others feel a sense of loss and confusion when retirement is suddenly thrust upon them.

However you are feeling about your retirement, you will need to carefully consider and plan your step into retirement.  With the average life expectancy in Australia at around 80 years of age, it’s likely that you’ve got many years ahead of you that you will need to support yourself financially.  You might like to consider the following questions:

  • What sort of lifestyle do I want to have?
  • How much money will I need on a regular monthly basis?
  • Do I want to leave a legacy to my loved ones in the future?

2.  Retrenchment as a Windfall

If you know that your retrenchment is just a temporary pause in your career, your planning is going to be very different.  Remember that there is the possibility that you may not find a suitable new position for some time so resist the urge to spend your lump sum payout – you may need it to support yourself over the coming months.  In addition, with appropriate planning and guidance, you could use your redundancy payout to help you secure your financial position for the future by appropriate investing.

Getting Financial Advice for Redundancy and Retrenchment

Regardless of whether your redundancy or retrenchment is a permanent step towards retirement, or a career gap, it is important that you seek financial advice from an experienced financial planner.  If you’re retiring, an adviser can help plan your finances so that you can use your redundancy payout appropriately to fund your lifestyle for the rest of your life.  If you’re on the hunt for a new job, a financial planner can help you get the most out of your redundancy payout by showing you ways to invest it appropriate to your situation.

To find out more, book your free first financial planning meeting with a Financial Spectrum financial adviser in the Sydney CBD.


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One Response to “Redundancy and Retrenchment”

  1. Mark April 15, 2010 at 10:45 am #

    I totally agree with the idea that how you need to plan your retrenchment really depends on whether you’re going to get another job or not. So many people focus on redundancy that means you’re forever out of the workforce…

    I got made redundant last year and got paid a pretty sizable sum. I’m in my late 30s and thought I’d get another job pretty easily so I spent most of my payout on an overseas trip. 8 months later I’m still out of a job and the money that could’ve been spent on living expenses etc and maybe investing to put me in a better position later on in life has gone! I wish I could do it all over again – I would make a very different choice.