Personal Finance

I'm in my 50s and was recently laid off - should I just live off my investments instead of getting another job?

Joey Frenette

Published: February 16, 2025 12:11 pm

It can be tough to get back on your feet after getting hit with a layoff, especially if it came from out of left field. Undoubtedly, it would be best for someone to take a bit of time off to process things and be in a better frame of mind ahead of one’s job search.

In many ways, sprucing up the resumé, applying for a new job, prepping to the HR screeners, going through many rounds of interviews, and all the sort is very much like having a job. While many want to get new work as soon as possible, I do think that if the severance is good, one should not feel guilt in taking some time off to reflect and make key decisions that will set the tone for the next stage of their career.

Of late, layoffs across a wide range of industries have been on the rise. As to whether the pace will continue through 2025 remains to be seen. Either way, layoffs could be enough of a setback to cause someone in their 50s to consider retiring early rather than having to start all over again in a job market that’s not exactly the hottest in the world.

In this piece, we’ll look at one Reddit user from r/fatFIRE who’s considering just that. They’ve got a large enough nest egg (they’re a multi-millionaire with over $7 million saved up) to treat their recent layoff as a nudge into an early retirement. Indeed, it’s a situation that many people in their 50s and 60s may be considering. 

But the big question is whether they should embrace the FIRE movement now. Or go through the job hunt one more time to add the finishing touches to their retirement savings?

Does retiring early derail one’s longer-term financial goals?

First, one should ask themselves if retiring post-layoff will cause one to fall significantly short of their long-term financial goals. Let’s say this Reddit user is a big spender, and they want a nest egg that’s sizeable enough so that the interest (or dividend) payments can meet their monthly expenses. While $7-8 million is more than enough for most to retire, it really depends on how much money will be going out once the prospective retiree finally makes the transition.

Even if the numbers work and one can embrace a “fat” FIRE, a more ambitious overachiever may be keen on hitting a certain figure before they feel comfortable retiring. Whether the magic number is $10 million or something much higher, I do think that such individuals may wish to consider taking some months off to really think about what their next move will be.

Either way, with $7-8 million, I think the Reddit user is long overdue for early retirement. Unless they have grander ambitions in mind, perhaps it’s time to meet with an advisor to explore the ways they can “shift gears” on their lifestyle and their portfolio holdings.

Shifting the investment portfolio with passive income in mind

With such a massive sum saved, this Reddit user may just be able to live off the interest and dividends without having to touch the principal. With an average portfolio yield of just 1%, the Reddit user will be able to make around $80,000 annually before tax.

A run-of-the-mill S&P 500 index fund would be enough to yield such an amount that the user doesn’t have to touch any of the invested principal as it continues to grow. Perhaps living off the income generated could allow the Redditor to retire while continuing to watch their nest egg keep growing at a respectable rate.

Of course, if the individual has a lavish lifestyle, averaging a 2% or even 3% yield could make sense. However, higher yields will come at the cost of lesser growth on average.