“The only constant in life is change”. Whether it’s due to economic downturns, new technology or extreme weather disasters; no business, job or career will ever stay the same.
It’s impossible to know what might happen in the coming months or years in your career or the legal sector. The thought of planning for a time when your skills might become redundant or your employment suddenly ends might sound negative but dealing with some key considerations can help you take back control of your life and career.
- Redundancy payment: Genuine redundancy payments are given special tax treatment, including a tax-free amount related to years of service. Your lump sum payment might be your last pay packet for a while, so draw up a budget. This will help you identify areas where you can economise until you find a new income. Your financial adviser can help you work out the best use for any lump sum you receive.
- Mortgage: If you have a home loan, contact your lender immediately. You may be able to adjust payments while you are out of the workforce.
- Centrelink: You may be eligible for income support from Centrelink. Be aware that waiting periods and income and asset tests apply, so contact Centrelink as soon as possible. Go to www.humanservices.gov.au for details.
- Superannuation and insurance: You will need to check your insurance details with us, or any other super accounts you have. Check how much you’re covered for, adjust it if you need to, and make sure it won’t be cancelled if you stop receiving super contributions.
- An income from your super account: If you've reached your preservation age - you could be eligible to draw down your super as an income, even if you're want to keep working. Take a look at our Retirement Income options.
- New job or new career: Redundancy is usually an unwanted challenge, but many people take the opportunity to make the move to a completely new career. This may involve a period of re-training for which government assistance may be available. It’s possible to come out of your redundancy experience with the chance of an exciting future.
- Other support: Some companies offer outplacement assistance to former employees. Apart from helping you update your CV, find a new job or transition to a new career, outplacement companies can also provide support in dealing with the emotional consequences of retrenchment. If outplacement services are available, always take advantage of them.
Managing debt is often the greatest concern for people whose jobs are made redundant. The key debt management techniques are consolidation and reduction. Consolidation refers to rolling debts together into the loan with the lowest interest rate. For example, you might be able to re-draw against your lower interest rate home loan to pay off high-interest credit card debt. This can significantly cut your expenses.
Then it’s a matter of allocating any spare cash to the outstanding loan. Being able to make extra repayments will put you in a better position if your income is lost or substantially reduced. Then if the worst happens, you will have more leverage when working out a new repayment plan with your lender. The earlier you talk to your lender the more assistance it may provide.
If you have multiple credit cards with high balances but no mortgage, an option is to transfer all of your credit card balances to just one card. Many providers offer initial low or nil interest rates to roll over debt. Just make sure you destroy your other cards and pay off the full balance before the end of the “honeymoon” period.
Tackling the Budget
In the good times, it’s easy to spend without thinking. When things get a bit tighter, it’s crucial to sit down and work out what you need to spend, and what you can do without. There are a plethora of simple templates available online and phone apps to make preparing a budget easy.
Don’t wait until money is in short supply to do a budget, simply knowing what you have to work with and what you spend can relieve anxieties.
Opportunities and threats
There is no doubt, redundancy is stressful - one day you have a steady income and a plan; the next day you have lost both. But it can create opportunities. You may be offered assistance with finding a new job or retraining - make the most of every offer.
Some welcome the financial windfall a redundancy may bring and might be able to enjoy the break and look forward to a new, exciting future. For others the emotional consequences of losing a job can be serious, varying from feelings of helplessness to deep depression. If you have family members or friends who are not handling their job loss, encourage them to get help. The family doctor is a good starting point or visit mindscount.org/get-help-now/for helpful resources.
This information is general information only and does not take into account your individual objectives, financial situation or needs. Accordingly, before taking any action, you should consider whether it is appropriate to you, having regard to your objectives, financial situation and needs. You should obtain a copy of legalsuper’s Product Disclosure Statement (PDS) which is available by contacting legalsuper or via legalsuper.com.au before making a decision. Past performance is not a guide to future performance.
10 tips to ace your next video job interview
How you can make the best possible impression with your interviewer
The highs and lows of life in the law
To celebrate Mental Health Month, we're re-sharing this 2019 article. Tony Burke opens up about how to create and run a successful practice; transitioning to retirement; and a completely unexpected recent diagnosis of Type II Bipolar Disorder.