At 51 years of age, redundancy was unexpectedly put on the table for Elizabeth* who had a senior finance role in a global tech company. She saw it as a chance to slow down. The question was: how much could she afford to slow down?

With pensions, savings and the redundancy package, Elizabeth came to us looking for help as to what her next career chapter needed to look like to support her annual income needs. She knew that she needed a new source of income, but she also wanted to spend more time with her family. Her questions centred around the following:

– Can I afford to take a 12-month career break?

– How much income would I need in retirement?

– How much more do I need to earn over the next 10 years?

– Should I pay off my mortgage before getting a new job?

The advice: focus on the pension

Central to Elizabeth’s wealth was her pension, which left unchecked would exceed the €2.2m pension Standard Fund Threshold, leading to a significant tax charge as Elizabeth and her employer had been making considerable contributions annually. We advised Elizabeth to take the 25 per cent lump sum now from her pension fund to free up some funds and clear the mortgage. She could then leave the remaining 75 per cent to grow in an Approved Retirement Fund (ARF). That gave Elizabeth the necessary headroom to take some time off as well as offering her the optionality of earning less down the line, and still retire at 60.

Then, by modelling a number of lifetime cashflow scenarios using her available assets, we were able to create a plan that also gave Elizabeth and her husband the following key actions to optimise their overall financial position:

– After calculating a retirement income need of €72k p.a. net, we established Elizabeth’s earnings from any new job needed to be in excess of €150k p.a. which served as a great guide as Elizabeth considered her next steps career-wise.

– Looking at Elizabeth and her husband’s estate, we also estimated an inheritance tax liability of €1m which would be payable by their two children. There are some strategic planning options for the couple to consider in order to offset some of this liability on behalf of their children.

– Elizabeth’s husband knew that he would receive proceeds from a family house sale as part of an inheritance in the order of €400k within the year, and was concerned about inflation and the cash sitting on deposit too long. It emerged that the couple had very different risk appetites (see also: How Your Personality Affects Your Investment Decisions). So, we built a moderate portfolio with a target return of 3.5 per cent p.a. which was made up of a mix of funds that reflected their combined risk profiles.

Plan to make it work for you

Redundancy can be a great opportunity or a scary one, depending on your set of circumstances. Make a plan and talk to a financial advisor to work out what might work best for you.

Elizabeth’s experience shows that with thoughtful planning, she was able to gain visibility over her retirement income, reduce future tax burdens, clear her mortgage, and give herself the breathing space to take a career break without jeopardising her long term goals. Whether redundancy arrives unexpectedly or you’re simply rethinking your next chapter, this stage of life is an opportunity to make decisions that truly support the lifestyle you want in your 60s and beyond. At Goodbody we can help you turn uncertainty into a clear, practical plan, one that gives you options and protects your future.

Your 50s are a decade of clarity. With the right plan, you can make this chapter work for you.

^*Names have been changed to protect client anonymity.