Picture this, you’re in your peak earning years, have long-term plans or goals, and you are presented with a severance package. For some, it can be incredibly devastating news. For others closer to retirement, it could be viewed as a blessing in disguise. Regardless of your scenario, there are many factors to consider when you’ve been terminated, on top of dealing with the emotional impact.
During COVID-19, we have seen an increase in people losing their jobs due to company restructuring. It has become a conversation that we’ve had with many clients over the past 6 months. We recommend that clients consider the following:
- Review severance package and decide whether independent legal advice is necessary
- Review group benefits and determine what will be lost (i.e. health insurance; life insurance; investments; etc.)
- Create cash flow plan to ensure short term expenses are covered
- Review RRSP contribution room for tax saving opportunities
- Determine expected length of time for unemployment
- Review pension plan options and determine what is most advantageous for your scenario
This is not an exhaustive list, but it does pertain to the important decisions that must be made in the short term. I strongly suggest speaking with your advisor prior to signing off on the package. It is of the utmost importance to review all options with a professional before making the decision.