Facing redundancy can be a challenging and emotional experience. It’s important to take a calm and considered approach to ensure you make the best financial decisions for your future.
A qualified financial adviser can assist you in navigating this period with confidence and security.
Below is a checklist to guide you through the key areas you should review and discuss with a professional adviser.
- Understand Your Redundancy Package
Before making any decisions, ensure you understand the details of your redundancy package. Check what entitlements you are receiving, including:
- Severance pay: How much you will receive and how it is calculated.
- Accrued leave: Payment for unused annual and long service leave.
- Other benefits: Bonuses, commissions, or other entitlements. A financial adviser can help you assess the full value of your package and advise on the most tax-effective ways to receive these payments.
- Review Your Immediate Financial Needs
It’s important to evaluate your short-term financial position. Consider:
- How long your redundancy payment will sustain you.
- Your current debts and essential living expenses.
- Any upcoming large expenses. An adviser can help you create a temporary budget to manage your cash flow while you transition to your next opportunity.
- Manage Your Tax Obligations
Different components of a redundancy package can have different tax treatments. It’s crucial to:
- Understand the tax implications of each payment type.
- Maximise any eligible tax concessions.
- Explore strategies like concessional contributions to superannuation, which may reduce your taxable income. Seeking professional advice ensures you make informed decisions and avoid unexpected tax bills.
- Superannuation Considerations
Redundancy may affect your superannuation, especially if contributions cease while you are unemployed. Some key considerations include:
- Reviewing your current superannuation balance and investment options.
- Ensuring your insurances (such as life, TPD, and income protection) within super remain intact.
- Considering additional contributions if appropriate and affordable. A financial adviser can help structure your superannuation strategy to protect and grow your retirement savings during this period.
- Insurance Protection
Employment changes can impact insurance policies linked to your job or superannuation. It is essential to:
- Check whether your insurance cover continues post-employment.
- Understand any policy terms, conditions, or waiting periods.
- Assess if you need to take out personal insurance to protect your income and family’s financial security. Professional advice can help you secure adequate coverage tailored to your new circumstances.
- Government Assistance
Depending on your financial situation, you may be eligible for government support such as:
- JobSeeker Payment.
- Rent assistance.
- Health care card benefits.
A financial adviser can guide you through the application process and help you understand your eligibility.
- Career Planning
Redundancy can also be an opportunity for positive change. Whether you wish to seek similar employment, retrain in a new field, or even start a business, a financial adviser can help:
- Plan your finances to support further study or business start-up costs.
- Manage your savings to provide stability during career transition.
- Long-Term Financial Planning
Beyond immediate needs, it’s important to reassess your long-term financial goals. Consider:
- Retirement planning and adjusting superannuation strategies.
- Reviewing investment strategies.
- Setting new savings goals. A financial adviser can work with you to revise your financial plan and ensure you stay on track to achieve your goals despite this period of change.
In Summary
Redundancy can feel overwhelming, but you don’t have to face it alone. A qualified financial adviser can provide tailored advice to help you understand your options, manage your finances, and plan for a secure future. Seeking professional guidance early can make a significant difference in achieving the best possible outcomes during this transitional period.
If this article has inspired you to think about your unique situation and, more importantly, what you and your family are going through right now, please get in touch with your advice professional.
This information does not consider any person’s objectives, financial situation, or needs. Before making a decision, you should consider whether it is appropriate in light of your particular objectives, financial situation, or needs.
(Feedsy Exclusive)