Redundancy takes away your choice of timing. Planning is how you take some of that choice back
I’ve had several versions of the same conversation this summer. Different people, different circumstances, same opening line: “I wasn’t ready.”
One man I met recently had his retirement pencilled in for two years’ time. Then his company changed hands, the new owners restructured, and the role he’d held for over a decade simply disappeared. Another client had given thirty years to her profession before being told it needed fewer people like her. She couldn’t even point to a single reason why. A reorganisation here, “efficiencies” there – and a nagging suspicion, which she could neither prove nor shake, that software now does part of what she used to do. Neither of them chose the date their working life changed. That’s the part that stings.
It’s a loss. Let’s call it that.
Redundancy in your late fifties is a strange kind of grief. You’re mourning a routine, a title, a version of yourself – and at the same time fielding cheerful comments about “early retirement, you lucky thing!” It doesn’t feel lucky. It feels like someone else made the biggest decision of your life without asking you.
So before any spreadsheets: that reaction is normal. You’re allowed to be angry and relieved and frightened, sometimes all in the same afternoon. That’s a lot going on.
Don’t decide anything for a month
Here’s what I would suggest, and it surprises people: do nothing. Not yet.
A redundancy payment arriving in your bank account creates a strange pressure to act – pay off the mortgage! Top up the pension! Book the cruise! But money decisions made in the first shock of change are rarely the ones we’d make three months later. The payment isn’t going anywhere. Park it somewhere sensible and let the dust settle.
A couple of useful things to know while you’re catching your breath. The first £30,000 of a redundancy payment is usually tax-free; anything above that is taxed as income, which matters more than people expect in the year it arrives. And be a little wary of advice from well-meaning colleagues going through the same thing – I’ve seen more than one person act on something a workmate “knew for definite” that turned out not to apply to their own situation at all.
The question underneath: could this actually be it?
In essence, redundancy in your late fifties forces a question most of us keep politely postponing: when could I actually afford to stop working?
Sometimes the answer is genuinely surprising. The man whose role disappeared two years early? When we looked properly – pension pots, savings, what he actually spends rather than what he feared he spends – the gap between his plan and his new reality was smaller than he’d imagined. Some modest adjustments, and his “two years too early” became simply “early.”
And sometimes the answer is: not yet, but nearer than you think.
Work, but on your terms this time
Plenty of people bridge the gap with something new – part-time work, consultancy, or a role that suits them far better at 58 than the one they lost at 57. Just a couple of things worth knowing before you leap. If you go self-employed, keeping your own pension contributions going preserves valuable tax relief. If you’ve already started drawing on a pension, going back to paying in comes with limits, so it pays to check before you do both at once. And whatever you choose, look at your National Insurance record – stopping work early can leave gaps in your State Pension, and plugging them can be better value than people expect.
And if you don’t need the money? Before Ginkgo I worked in the charity sector, so I’ll admit I’m biased – but some of the most contented “retired” people I know aren’t retired at all. They’re running food banks, mentoring, doing the books for the local hospice shop. Volunteering gives you the structure, purpose and people that a job provided, without the alarm clock. Your finances don’t need you to be paid; sometimes your wellbeing just needs you to be useful.
The ending you didn’t choose can still be a good one
Whatever bridge you build, it’s a sum, not a feeling. Fear does terrible arithmetic. It tells you you’re finished, or it tells you you’re fine, and it’s frequently wrong in both directions. The only way to know is to lay the numbers out and look at them together.
One thing I usually say when we do: for most people at this stage, some of the money stays invested for the years ahead, and its value will rise and fall along the way – no one can promise what it will be worth in any given year. That’s exactly why we’d generally recommend keeping a cash safety net for the near future and letting the longer-term money take the longer view. One foot on the accelerator, one on the brake.
Redundancy takes away your choice of timing. Planning is how you take some of that choice back.
If work has ended before you were ready – or you can see it coming and want to be prepared – come and have a cup of tea with us. Bring the paperwork, bring the worry, bring your other half if you like. We’ll put the kettle on and do the sums together.
Catriona Bryden, Financial Adviser at Ginkgo Financial
