Retirement Tax Tip: When Job Loss Results in Early Retirement

Losing a job—especially unexpectedly—can be a difficult life event. You should know how to keep as much as possible of a lump sum that might come your way. The taxes on this lifeline can rob you of precious resources while you look for new work or arrange for your retirement income. There are also investment planning decisions to be made.

Begin by answering the common “trigger questions” most people in this situation have:

• Is termination payment acceptable?
• Will you want to contest the termination?
• Do you need to be introduced to a broader professional team that may include lawyers and accountants, recruitment services, or credit counselors?
• How can you develop new networks of potential influencers to assist in seeking the next opportunity?
• Will you be employed or self-employed in your future?

If illness is a reason for job termination, financial relief may be available by applying for the Canada Pension Plan disability benefits, Worker’s Compensation or Wage Loss Replacement Plans.

Next time: Tax Strategies for Retiring Allowances

Evelyn Jacks is President of Knowledge Bureau, home of the MFA-Retirement and Estate Planning Designation.  Call 1-866-953-4769 to register.

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