Moneymakeover AVC with redundancy, or keep the cash to ride out potentially long time to find a job?

[Honestly]

Personal details
Your age: 39
No partner, no children, none planned, happily.

Income and expenditure
Annual gross income from employment or profession: was 148k, just made redundant

Monthly take-home pay: 6k (after tax, after pension contributions - I was paying in 10% with company matching 5%)

Type of employment - e.g. Employee or self-employed. Full time private company

In general are you:
(a) spending more than you earn, or
(b) saving?

Saving 500 a month

Summary of Assets and Liabilities
Family home value: 500k
Mortgage on family home: 236k
Net equity: 0

Cash: 6k
I recently gifted my mother 30k to help her relocate, and her inheritance will become available early next year. Ideally I would prefer not to ask her for this money back.

I have four pensions, with 95k in them now


Family home mortgage information (switched thanks to the guidance I got here)
Lender: Avant
Interest rate: 1.95%
Type of interest rate: fixed, 7 years, 3.5 years in
Remaining term: (Original term is not relevant) 24 years
Monthly repayment: 1000

Other borrowings – car loans/personal loans etc
Do you pay off your full credit card balance each month? Yes

Pension information
Value of pension fund: I have three pensions, with 78k in them now

Other information which might be relevant
Life insurance: just mortgage protection

Rental income 700 a month from renting a room to a friend

What specific question do you have or what issues are of concern to you?
I am being made redundant. I am getting 54k before tax, and I think that works out at 38k after tax.
I was considering a 5-10k AVC before payout, however, it could be 6-12 months before I find another job.

I have savings (6k), redundancy (30-38k depending on AVC choice) + rental income (700 per month) + social welfare (I think I'll get €1800/month?) . In an emergency, I could ask my mam to repay some of the money I lent her, but I would rather avoid that.

Should I do an AVC to my pension, to offset the months I wont be working and maximise investment/tax, or should I hold onto the cash and max out contributions in my next job?

 

[ClubMan]

... or keep the cash to ride out potentially long time to find a job?

... however, it could be 6-12 months before I find another job.

Why do you think that it may take a long time to find a new job?

Monthly take-home pay: 6k

Saving 500 a month

Rental income 700 a month from renting a room to a friend

Are you actually spending c. €6.2K p.m.?
If so then your €6K savings won't last long so you should probably keep your redundancy money liquid until you get a new job?

 

[Premos]

From experience, best case scenario, if the redundancy wasn't expected, you are back in a job in 3 months. Between getting contacts, interviews, job offers. I don't know when you will actually finish but from mid November to mid January, things in terms of recrutement do get quieter so you might want to plan for this too. For our household, the quickest was about 6/7 weeks between learning about the possibility of redundancy and back in a job. However, to be honest, that was a bit rush and ended up in a job from hell! So you do need to plan, take your time. Not every opportunity is a good opportunity.
Before making, analyse your outgoings and see how you can reduced your spending. Note that €450 weekly payment is only for the first 13 weeks. Do you have income protection insurance for your mortgage, if so look at what you need to claim, there is generally a few weeks not covered. If you really think it could take long for you to find a job and as the amount you could put in your pension is not that substantial, you might want to consider increasing your contribution once you find a job. If you turn 40 in 2026, you could contribute up to 25 per cent of the first €115000 of your wage.
I know this might not fully make sense financially but being made redundant can be a a stressful period without actually worried about how to make ends meet on a monthly basis or having to accept the wrong job because you are running out of money.

 

[misemoi]

100% pace yourself and try not to panic about finding work. As you said, it is a niche industry so if you make the wrong choice it might be hard to move on again. So I would make sure that I had a cash cushion to avoid feeling pressure. Plan to do some beneficial things during your downtime, volunteering, upskilling, networking, see if you could do something low cost like house sitting somewhere you want to travel to etc.

 

[_OkGo_]

The short version: I would retain the cash and take the time to find a job you want instead of a job you need.

Longer version:
For clarity, you've already missed the deadline for a 2024 AVC.

For 2025, you need to make the payment before you leave employment which I find very unfair (at a national level). So essentially you lose the ability to make AVC's for tax year 2025

But more importantly, €6-10k in your pension is €3.6-6k net out of your pocket. In the grand scheme of things, that money is far more valuable in your pocket now if it gives you the flexibility to find another high paying role.

I would prioritize maxing pension contributions from here forward over a one off contribution now when you are facing unemployment.

In the shorter term, you have about €2.5-2.6k per month between rent and social welfare plus >€40k in savings so you should be fine to maintain a decent standard of living but you should make sure your spending is under control. Something like your friend unexpectedly moving out would make things a bit tighter especially as the PRJB reduces.

If I remember correctly, you are quite generous with your income to family/friends. It's a good trait but needs to stop indefinitely until you are back in employment. And it may be a good excuse to break that habit in future and prioritize your own financial well-being (pension)