There’s never a good time to be made redundant and with many of us on furlough, you might be wondering about your future job security. If you’re over 50, facing redundancy doesn’t just affect your financial future in the short-term, but you’ll also need to take a look at your retirement and savings as you plan your next steps.
When you’ve contributed 20 to 30 years of loyal service to your company, being told that you are expendable has a significant impact on your emotional wellbeing and sense of self-esteem. You’re most likely concerned about what happens next and if you have time to start over with a new company or even a new career path.
You might be worried that you can’t find new opportunities or be forced into early retirement. But there are proactive steps you can take to secure your financial future and set yourself up to deal with redundancy no matter what your situation.
With employees in their 50s twice as likely to be made redundant as colleagues in their 40s, older workers have a reason to feel vulnerable. Losing the job security, you’ve enjoyed for years is a difficult transition, and it can leave you feeling unsure and anxious about the future. But with the right financial planning advice, you can make redundancy work to your advantage. Whether you want to start your retirement early or are looking for a new challenge, being made redundant might be the push you need to start something new.
Look After Your Mental Health
No matter how old you are, losing your job is a life-changing event. Transition and uncertainty can have a profound impact on our mental health and emotional well-being, so it’s important to monitor how you’re feeling and reach out for support. Within six months of redundancy, one in seven men develop depression, according to figures from mental health charity Mind. Therefore, it’s crucial to create space to look after yourself and honestly talk about how you’re feeling with your partner or close friends.
Redundancy can trigger financial anxiety, loss of self-esteem and leave you struggling to find a sense of purpose. Giving yourself time to adapt to your new routine and process losing your job will leave you in a stronger position mentally and emotionally when you start planning for the future. Rather than jumping straight into job searching, it might be a good idea to give yourself a short well-earned break from work. This way you can approach any important decisions about your future with a positive and refreshed outlook.
Make sure to talk honestly to those who are closest to you. Your loved ones can’t support you if they don’t know how you’re feeling. Give yourself time to process how you’re feeling and take a break from job hunting to make sure you’re in the best possible headspace before making important decisions.
Get a Good Understanding of Your Finances
Take a thorough look at your financial health before you start planning your next move. Check out our detailed guide to securing your finances against redundancy here. If financial anxiety is causing your mental health to decline, getting an understanding of your finances can help you to reduce your anxiety by putting measures in place to secure your future.
Statutory redundancy entitlement means that employees are due one week’s pay for every year of employment between 22 and 41, and a week and a half’s pay for each full year after the age of 41. Length of service is capped at 20 years with weekly pay capped at £525. The maximum statutory redundancy payment is £15,750. You may also receive severance pay on top of this, which is tax free up to £30,000. You will need to check your employer’s redundancy package to find out how much severance pay you will receive beyond statutory redundancy entitlement.
Following redundancy, it’s a good idea to get advice from a financial planner so that you can get a complete picture of your financial situation and maximise opportunities to generate income from investments and pension plans. Whether you want to work out if you can afford that early retirement you’re dreaming of, or if you want to take a new job, a financial planner can help you determine what you can afford.
Planning For Early Retirement
If you want to use your redundancy as an opportunity to take early retirement, you need to calculate whether you have enough to live comfortably for the next 20 to 30 years or longer. This is a complex calculation based on your pension plan, savings, investments and the lifestyle you’d like to have when retired. That’s why seeking advice from a financial planner will give you a full understanding of your finances and how to secure your financial future in retirement.
If you work out that you can’t yet afford to retire, our tailored financial planning consultations also help you to consider the range of options available to you. You might need some help working out how much you need to earn from a reduced hours role or consider alternatives such as downsizing your home to reduce your mortgage.
Looking For a New Job After Redundancy
If you choose to stay in work and look for a new role, you’ll need to work out how much money you need to get by without a position. You’ll need to create a budget for living off your redundancy package and you may have to evaluate where to cut back on spending for the short-term.
It may take you longer than you expect to find a new job or you may choose to take some time out of work, so it’s important to have a clear picture of your financial health to determine what is affordable in the short-term.
If you decide that your redundancy is the perfect opportunity to retrain for a new profession, budgeting your finances is even more important. You could even decide to transition to self-employment or utilise your many years of experience as a consultant in your field. Both of these scenarios may involve a period of reduced income as you complete training or establish your business network, so it’s important to decide what is realistic. You might have to make short-term lifestyle adjustments as well as building a comprehensive personal financial plan.
Top 10 Tips For Surviving Redundancy in Your 50s
- Check your redundancy terms thoroughly.
- Know what benefits you’re entitled to.
- Talk honestly with your family and friends.
- Give yourself space to process and reset.
- Get financial advice from a qualified professional – meet our advisers.
- Determine a realistic budget.
- Understand how to get a handle on your debts.
- Aim to stay fit and healthy and build a positive attitude.
- Take time to consider different options.
- Consider the opportunity to re-train or become self-employed.
If you’re facing redundancy after 50 and want to receive professional advice on safeguarding your financial future, contact us to arrange an appointment with one of our friendly advisors.