Money
Lost your job over 50? Here's how to plan your next move (without blowing your retirement)
If you’ve been made redundant in your 50s, you’re not alone and you’re definitely not out of options. Here are 5 things that can turn a job change into the start of your most purposeful chapter yet.
By Alex Brooks
Being made redundant can be a massive blow to the ego and your financial plans - especially if you still have a mortgage to pay off and kids to support through school or uni.
With artificial intelligence shaking up workforces and nearly 1 in 3 Australian employers planning to make workers redundant, the brutal reality is that you need a career disruption plan in place should the worst happen.
So here are 5 ways to build a redundancy-resilient mindset and make smart money moves that will bounce you forward, not back.
Redundancy move # 1: Pause. Then plan, plan, plan
Being made redundant can feel like the rug’s been pulled out from under you.
Nestworth senior financial adviser Phillip Bures says it’s worth taking a breath and using that initial moment to get clear on your next best move.
“That sudden change in circumstances can be quite jarring and confronting,” he says.
He says employers are usually obliged to offer a ‘consultation’ or notice period under Australian workplace rules.
Most redundancy processes can give you the option of a few days, weeks – or sometimes in the public sector you can get months – to negotiate your redundancy timeline.
“Lead time can be invaluable. You get a chance to reflect and plan with more power and control,” Phillip says.
Space to think clearly, explore your options and make good decisions about work (as well as money and lifestyle) can change the entire tone of what comes next for you.
Redundancy move #2: Learn what rights you have – and use them wisely
Phillip advises bringing a support person – someone with financial or HR experience – to any redundancy consultancy meetings to help navigate negotiations and avoid being caught off guard.
If you're over 45, you may be entitled to extra severance pay under Fair Work redundancy rules. This could mean crucial breathing room as you consider your next steps.
Redundancy packages often include notice periods, annual leave, long service leave and superannuation payments and must meet the requirements of the Australian Tax Office’s ‘genuine redundancy or early retirement scheme’ rules.
It’s worth having a good financial adviser or accountant check the tax implications (and calculations) of your redundancy payout offer, too.
Before signing anything, you might also be able to explore whether your payout can be structured to minimise tax or maximise super contributions that can put you ahead of the game over time.
Redundancy move #3: Have a money buffer and a financial plan
Bures recommends having three to six months’ worth of expenses in savings – and seeking financial advice if you are about to get a precious redundancy payout.
“If you do have the ability to pay down debt through a redundancy payment, or knock off a mortgage then take advantage of that,” he says, recommending that everyone has a good financial adviser and mortgage broker (if you still have a mortgage).
Avoid knee-jerk financial decisions like buying a boat or blowing the money on a ‘much-needed’ holiday. “It’s easy to fritter away a redundancy payout,” he says.
The older you are, the more you’ll want umm and ahh about whether you should pay more into super or pay down mortgage debt. You might even want to open a transition to retirement option or work through a new pre-retirement game plan.
If you are aged over 60 when redundancy hits, you will likely be able to access your super, but Phillip cautions against that unless it’s absolutely necessary.
“Super is usually a last resort. That’s why it's worth speaking to a financial adviser,” he says
“At least use the ASIC MoneySmart budget calculator to get clear on your spending and see what you’ll need to set aside for essential expenses,” says Phillip. “Without a plan, a redundancy payout can vanish quicker than you think.”
Redundancy move # 4: Rethink your work and your worth
If you're aged over 50 and highly skilled, you might assume it will be easy to get another role at the same pay. And for some people it will be. The reality about how employers view older workers is often more brutal. Last year the Older and Younger Workers: What Do Employers Think? report, jointly produced by the Australian Human Rights Commission and the Australian Human Resources Institute, found that ageism in Australia is rapidly increasing.
Others might think a redundancy is the perfect opportunity to start consulting or doing some type of part-time ‘portfolio career’ work to step towards the type of job flexibility they could only dream of when they were aged in their 30s and 40s.
“We’ve seen people get caught up in the dream of freelancing, but still have a mortgage or school fees,” Phillip says.
“If they think, ‘this is it. I'm going to pull the pin’ then they need to ask can they financially afford to retire? I obviously would counsel someone to seek financial advice.”
Phillip has clients who have used redundancy to lock in their best life.
There’s the public servant who used her redundancy to lock in a $120,000 a year defined benefit pension and still consults in her industry to earn extra income.
And then there’s the passionate beekeeper who still works 9 to 5 but has professionalised his apiary and structured it as a legitimate business. He’s practically begging his employers to make him redundant and is effectively ‘architecting his own exit’.
“He’s gearing up to go all-in on his passion,” Phillip says. It’s a great example of how professionalising and planning your passion projects can evolve into a real next chapter.
Redundancy move # 5: Ageism is real – but so is your value
Yes, age discrimination exists – but you can proactively tackle it. There are ways to age-proof your resume and reskill to take advantage of growing workforce changes.
“Unconscious bias shows up in assumptions about older workers not being adaptable,” says Bures.
“You’ve got to front-foot it and show that you’re learning, open to new ways of working, especially if you’re job hunting for the first time in a long time.”
A redundancy is the perfect time to do a professional audit. Are your skills still in demand? Is your industry shrinking or growing? Do you want to move to a new industry that takes advantage of your skills?
If you want to retrain, there is self-employment assistance from the federal government, as well as career transition assistance.
“You don’t have to drop a hundred grand to do a two-year MBA – maybe do something a bit simpler,” Phillip says.
“You might just need to bolt on a few new skills. If you’re good technically, maybe get some management skills. If you’re a strong manager, find a new industry with more demand for your skills.”
With a solid savings buffer, smart super moves, and a mindset of adaptability, you can build something more flexible, fulfilling and financially secure. The power lies in planning.
Redundancy may close one door. But if you play it right, your next door could open onto the best years of your life.
Feature image: iStock/skynesher
This article reflects the views and experience of the author and not necessarily the views of Citro. It contains general information only and is not intended to influence readers’ decisions about any financial products or investments. Readers’ personal circumstances have not been taken into account and they should always seek their own professional financial and taxation advice that takes into account their personal circumstances before making any financial decisions.
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