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Senior Executives – What issues should you tackle before spending more time on the golf course?

Picture of Randall E. White

Randall E. White


It’s important to look over your choices and have a plan in place for your retirement. In this article, we will discuss a few areas to look into before you retire.

Big Picture

Before we talk about the financials, it’s good to take some time to discuss the bigger picture of retirement. If you’ve worked your way up to the executive level, there is a good chance you’ve invested a lot of your life and your time into your career. As you plan for how you will fund your retirement, it is prudent to also take stock in how you want to live your retired years day to day. Open communication with your partner and family about your goals is key. Having discussions of daily schedules, travel, volunteer work, and downsizing will all help give more structure and shape to this next big step. In that same vein, investing in your overall health through diet and exercise and possibly lifestyle changes may also help improve the quality of your retirement. Being financially secure is obviously very important but being healthy enough to really enjoy it is too. Make sure that you look at the whole of your retirement, not just the money side.

Be the Ant Not the Grasshopper

That being said, anyone who gets to the top of the heap has learned that the positions there may not last forever. Staying up-to-date and not having a foot out the door and a mind in the Bahamas before your official retirement starts is key. These are high paying, sought-after positions and that makes them competitive. So, best to increase your savings rate and focus on creating a solid financial plan, building up your liquid assets and maxing out all your contributions to your 401(k) and other plans. In addition to that it’s important to never get too comfortable with your seat on top.  Make sure to keep up with the market, learn new technologies and keep your skill set relevant and desirable.

Time your SERP or Deferred Compensation Plans Wisely

Upper management is often offered variations on a SERP (supplemental executive retirement plan) or a deferred compensation plan. These plans are designed so you can pick specific payout dates for the compensation to be received. The payouts come with tax consequences though and a lot of people do not plan this well.  Instead they often receive a big lump sum at the end of their career and incur a lot of taxes and fees. It may be best to select a staggered plan, where small payouts are staggered over years because this will minimize the tax burden and also help with the transition into retirement. Similar to lottery winners though, many retirees take their pension plan as a lump sum payout versus a monthly annuity.[i] One benefit of the lump sum payout is that you get the full value at one time, the downside being that there are no guarantees in life. Between taxes, inflation, and age related health issues that may arise, that money, if not protected, may not last as long as anticipated.

All That Company Stock

Have a lot of your net worth in company stocks? You aren’t alone. In fact, the majority of corporate executives have a large number of their investments tied up in the company they work for. The reality is though, that you don’t want too much of your net worth tied to one specific company. Financial advisors and experts often advise not to keep more than 10-15% of your assets in one specific stock.[ii] There are different ways to do this and one of the primary goals is to exercise your stock options while paying the least amount of taxes. You don’t want to dump all your shares at one time, instead develop a plan for how to strategically sell off stock to avoid or reduce penalties and taxes. No matter how you do it, it’s better to divest a big chunk of your company stock and replace it with more diverse holdings to provide diversification so you don’t have all your eggs in one basket. There also may be some stock you want to hold on to, specifically NUA (net unrealized appreciation) which offers you the ability to pay long term capital gains taxes instead of ordinary income tax on a portion the stock.

Take Advantage of Financial Services

If you are lucky enough to work for a company that pays for financial advisory services, it would behoove you to take full advantage of that. Most close-to-retirement executives will have complex investment portfolios. There is no one right way to handle yours, so it’s good to get expert advice on how to proceed. If you would prefer to go outside of your company, or it doesn’t offer the service, you should look for a financial advisor who is a licensed CFP® (Certified Financial Planner®) who will have a fiduciary obligation to serve your best interests.[iii] Retirement finances are complex and the tax issues, various investments, insurance coverages, and health care coverage can be a bit of a spider web to navigate. Best to create a realistic budget for your retirement, set financial goals and seek counsel with those who can help you get and stay on track.

You’ve worked hard to get where you are and your retirement should be no different. Taking a little time in advance to set goals for your retirement will help with any ‘now what?’ feelings that may arise. Being proactive and looking over your pension plans, stock options, and total investment portfolio along with seeking out some expert advice will get you on the right path.

[i] https://www.cnbc.com/2016/02/26/the-biggest-retirement-decision-an-executive-will-make.html

[ii] https://www.forbes.com/sites/maggiemcgrath/2013/10/22/how-much-of-your-companys-stock-is-too-much/#a2adae241278

[iii] http://guides.wsj.com/personal-finance/managing-your-money/how-to-choose-a-financial-planner/

Disclosure text: Securities offered through Triad Advisors, LLC, member FINRA/SPIC. Advisory services offered through TriCapital Wealth Management, Inc. TriCapital Wealth Management, Inc. is not affiliated with Triad Advisors, LLC.

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