There’s no ideal time to be made redundant, but if you happen to be over 50, being told your services are no longer required will hit you particularly hard. When you have given 20 to 30 years’ dedicated service to your company, have risen through the ranks and invested a large portion of your working life with one employer, being told you are an expendable asset is a psychological blow. It’s natural to wonder what’s next, and if there is even time at your stage of life to start over: will you find new opportunities, or will this push you into retirement against your wishes?
When employers make plans to lay people off, older workers have reason to feel vulnerable. A recent analysis from the Office of National Statistics suggests that workers in their 50s are twice as likely to be made redundant as colleagues in their 40s.
It isn’t just the realities of redundancy that older workers have to cope with. To lose the job security you have enjoyed for years is a hard blow, and makes many people feel unsteady.
Yet it is important to keep some perspective. Is redundancy in your 50s a disaster for everyone? Not at all. For some, the pay-out and the early termination of their contract is a welcome opportunity to move to the next stage of their life. It hands them the chance to embrace a comfortable retirement several years ahead of schedule. Meanwhile, for those who are not ready to give up the cut and thrust of working life, redundancy can turn out to be the push they need to seek out a new challenge.
If redundancy is looming for you, it is natural to be feeling anxious about what the future holds. But many people come out the other side of redundancy much the better for it. Here’s how to make sure you do the same.
Don’t panic… and look after yourself
First of all, losing your job at any age is a major life-changing event. It’s important to monitor and manage its impact on your emotional well-being. According25 to mental health charity Mind, one in seven men develop depression within six months of redundancy. Losing your job puts you at risk of mental health issues, so you need to take care of yourself.
Redundancy can lead to worries about money, loss of self-esteem or sense of purpose, and the disappearance of the important social resources provided by colleagues. It’s a good idea to give yourself time and space to adjust to the changes, and to make plans for the future.
Don’t fall into the trap of trying to bottle everything up. Talk to the people close to you about how you are feeling and let them in on your planning for what happens next. There’s no need to pretend redundancy is the best thing that could have happened to you if that is not really how you feel; friends and family won’t be able to give you the emotional support you need if they don’t know your true feelings.
Rather than throwing yourself into finding a new job, it might be a good idea to treat yourself to a well-earned break. Then you can approach the important decisions refreshed and renewed.
Get a financial health check
After taking care of your own well-being, the second area to consider is your financial position. This could also be one of the key factors affecting your state of mind.
In terms of statutory redundancy entitlement, employees are due one week’s pay for every year completed in employment between the ages of 22 and 41, and a week and a half’s pay for each full year after the age of 41. For these purposes, length of service is capped at 20 years, and weekly pay is capped at £525. The maximum statutory redundancy pay-out is £15,750. If you receive severance pay on top of this, no tax is payable on the first £30,000. Different employers will offer different packages in terms of any severance pay offered beyond statutory redundancy entitlement.
When you’ve been made redundant, it’s a good idea to seek the help of a financial advisor to get a complete picture of your financial situation. Whatever your plans, whether you want to retire or are keen to get back into work elsewhere, you will want to know what you can afford.
If you see redundancy as an opportunity to take early retirement, you will need to determine whether you have enough to live comfortably for the next 20 or 30 years. This is far from a straightforward calculation, which is why taking some advice makes sense. Check out this blog for more detailed advice.
And if you conclude that you haven’t yet got enough to retire on, what are your other options? Do you look for a new job, or consider alternatives like downsizing your home to free up equity and reduce your mortgage? This blog gives you key tips.
If you decide to stay in work, it’s important to gauge how long you can get by without a position. This is partly because the job search is an indefinite period and could take some time, but also in case you want to spend some time for yourself before you start looking. Working out a budget and a realistic time frame for living off your redundancy package will give you a framework to plan from.
If you embrace your redundancy as an opportunity to re-train in a new skill or profession—or even set up your own company, joining the increasing ranks of ‘olderpreneurs’—budgeting and investigating your financial situation is even more crucial. Either option may involve an extended period with a lower income, so decide what is realistic. Adjust your lifestyle and set out a clear plan.
A major upheaval like redundancy can be daunting, especially when you have felt established, settled, and secure in the future. But whatever you decide to do, remember that careers and ambitions don’t end in your 50s. You have options, and you can use this opportunity to take ownership of your life.
- Check your redundancy terms carefully.
- Check what benefits you may be entitled to.
- Tell your family and friends.
- Pause for thought.
- Get financial advice.
- Write up a budget.
- Understand your debt position.
- Aim to stay fit and positive.
- Take time out to relax and think.
- Consider retraining or self-employment.
Contact us to book an appointment to see one of our financial planners if any of these issues affect you.