When Campbell was made redundant, he was able to fall back on skills learned from a hobby to earn a living. Nonetheless, losing his job of 40 years had a huge impact on Campbell and Fiona Pearson’s retirement plans.
Just seven years before retirement age, Campbell’s income dropped by more than half when he was made redundant from his job of almost 40 years. His financial plans had to be redrawn.
The broadcast engineer thought he had a job for life when he was first employed in 1969 by the then New Zealand Broadcasting Corporation (NZBC). But in 2007, rumours began surfacing that Campbell’s part of the business was struggling.
When news came that operations were to be scaled back, Campbell chose redundancy over taking a job elsewhere in New Zealand. His contract had relatively generous redundancy clauses compared to others' more-recent employment contracts where he worked.
Campbell’s gross pay-out was less than two years' salary, which wasn’t enough to cover his income for seven years until he was eligible for New Zealand Superannuation. To make matters worse, the tax bill was far greater than he expected, leaving just 60% of the original payment in his hand. The pay-out was taxed at the top marginal tax rate because it was classed as income.
"I realised that I would need to keep working,” says Campbell. “I'm not someone who can do nothing, and working is good for the body and soul." He took odd jobs such as installing Freeview dishes and renovation. “Technicians are very versatile,” he says.
In the end it was Campbell's hobby of picture framing that provided a job and income for him. After consulting a business mentor, he decided to turn the hobby into a second career. The work is fulfilling, although considerably less well paid than his broadcast engineering job.
It gives Campbell the time, with Fiona, to look after grandson Benjamin one day a week. "This is a time in life when grandchildren are very important.”
The redundancy also gave Campbell and Fiona an opportunity to review their retirement savings. Fortunately they are mortgage-free and he has a workplace pension, KiwiSaver, and some other funds.
Even so, the couple decided to have a trial run for retirement by endeavouring to live off Campbell's reduced wage and putting Fiona’s income in the bank. The experience has encouraged Campbell and Fiona to look for ways to cut back on spending, such as reducing the level of their private health insurance.
“Other things we are thinking about are downsizing our car to a more fuel-efficient one to save money, and when Fiona retires next year we are considering a move up to the Kapiti Coast, or somewhere else, to realise some capital in our house in Wellington.”
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