I Got Laid Off – Now I Must Choose Between Taking Time Off or Finishing My Career

Losing a job can be a very though thing to cope with. Many people tie their identities to their jobs, so getting laid off can not only be devastating financially, but emotionally.

In this Reddit post, we have someone in their late 30s who recently lost a job that was paying them a nice salary of up to $200,000. The last time they lost a job, they managed to get a new one in under two months, so they’re not particularly worried about being out of work for too long.

Rather, they’re wondering if they need to jump back into work right away. They have $1.5 million in retirement and brokerage accounts, plus $500,000 in home equity.

They’re interested in taking a year off from work to regroup. But they’re also married with one child and feel their wife would get stressed about such a long career break. So they’re not sure what to do and are hoping for some good advice.

The good news is that the poster here does have options. But because their decision will impact their family, it’s not one to make solo.

Take time off versus dive back in

It’s easy to see why the poster could use a reset after being laid off. But one thing the poster doesn’t mention is whether they’re eligible for a nice severance package. That changes things, because if they’re getting six months of salary, that makes it easier to not work for a year.

But let’s assume that’s not the case, and that if anything, they’re getting minimal compensation and a small amount of money in unemployment benefits.

The issue is that while the poster has nice savings, every dollar they withdraw to cover their living costs in the absence of a job is money they won’t have for retirement. And so taking a break from work could negatively impact their future finances.

In addition to having to pay living costs, the poster will have to cover health insurance if they don’t work. So let’s say they’re able to get by on $100,000 a year, which is about half of the salary they say they just lost.

If they take $100,000 out of their brokerage account now, the cost could end up being more than that if they aren’t retiring for another 10 to 20 years or longer. That’s because the money that’s removed will lose out on gains.

There’s also the fact that the longer the poster stays out of the workforce, the harder it might be to break back in. And it may be a particularly dangerous time to be lax about finding a job given that many experts are predicting that a recession could be right around the corner.

A decision that needs to be made jointly

Based on the information shared, it seems that the poster is the sole breadwinner in the household. Even so, the poster and their wife should act as a team when making financial decisions. And even though it’s the poster who’s the one going to work (or not) every day, their wife should get a say in their next steps.

If the wife isn’t comfortable with the idea of the poster taking a year off, that’s something that needs to be considered. Also, it may be that the wife contributed nicely to the $1.5 in investments the couple has. It wouldn’t be fair to her to start spending down those assets because the poster doesn’t want to work for a while.

That said, the poster doesn’t necessarily have to return to a traditional job. There may be opportunities to work as a consultant where they set their own hours, or to start a venture of their own.

Another option may be for the poster to work part-time and the wife to work part-time. Whether that would give them the income needed to cover their costs, though, is unclear.

Either way, it would likely be helpful for this couple, and anyone else in a similar boat, to discuss the situation with a financial advisor.

An advisor can help them sort out their income needs and help them make a decision that aligns with their long-term goals. And if they decide to live off of their investments for a while, an advisor can help them manage that situation and suggest assets that provide additional income while the poster is out of work.

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