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5 Steps to Transition into Retirement with Equity Compensation , Episode 23

In today's episode of the Equity Compensation Guidebook, we're going to touch on one of the biggest questions in personal finance. How to transition to retirement? Specifically, as it applies to the world of equity compensation. I'm giving some official disclaimers right upfront. Retirement is almost never a simple decision. Even if you have lottery winnings, there are a lot of individual decisions that need to be made before you can make the big one of transitioning to retirement. There is no uniform rule on the right amount of money needed. There is no magic number but there are some steps to planning and today I’m going to break it down into 5. 


You will want to hear this episode if you are interested in...

  • One of the biggest questions in personal finance [0:21]
  • Taking inventory of your equity compensation positions [2:32]
  • Adding up the value & concentration risk [3:27]
  • Gathering documentation [4:07]
  • Review documents to know what happens with unvested or unexercised positions [4:34]
  • Developing a plan around each stock option [5:15]
  • This week’s FLASHBACK [7:21]

Taking inventory

First, take stock of your equity compensation...NOW! I seriously want you to take inventory of your various equity compensation positions. I don't care if you're a 64 or 34. Take the time. Make the effort. Gather up the details of your non-qualified stock options, restricted stock units, restricted stock awards or grants as they're called, and also your employee stock purchase plan positions. In this episode, we will talk about all of the details that you should gather in the cases of non-qualified stock options and RSUs. Be sure to listen.

Developing a plan

The fifth and final step we will cover in today’s episode is to develop a plan around each stock option when it is granted to you. You've spent all the time gathering up the details on your entire retirement picture. Now you can start deciding if and when you should start exercising options. Factors going into this decision include years to retirement, concentration risk, taxes, total retirement savings, and also vesting schedules for the restricted stock awards and RSUs.

For the full scoop and more information on all 5 steps be sure to check out this episode!

This week’s FLASHBACK: M.obile A.rmy S.urgical H.ospital

I loved watching M.A.S.H. growing up. It was a great show with solid writing, terrific acting, super characters, and so much more. Plus every problem was solved in well under 30 minutes and they would often cover serious topics, even though it was a comedy. 

For a short period of time, I wanted to be a surgeon when I was growing up. I'm sure watching M.A.S.H. had something to do with that. One day I saw the mostly unedited version of M.A.S.H. the movie on a Saturday afternoon. The amputation scene with the saw immediately changed my future career plans. Plus I later learned in high school I really did not have much of a science aptitude. There were 11 seasons of M.A.S.H. in total and I'd probably seen every episode at least twice. I joke with my wife this pretty much qualifies me as a doctor. She is a nursing professor, so she totally disagrees with my assumption, but I'm not so sure since she hasn't seen as many episodes as I have.


Resources & People Mentioned

As always, thanks for taking the time to read this. Please do not hesitate to reach out if I can be of help with your equity compensation-related questions. The easiest thing to do is to click the little green box that reads “Schedule a Meeting” that can be found at the bottom of every page on my website. Or, just click my Calendly link right here. 

I’m Dan Johnson, CFP®, founder of Forward Thinking Wealth Management. I run a flat-fee financial planning and investment management firm located in beautiful Akron, OH. Although I am in Akron, OH, I work with clients regardless of location. I cater to owners of equity compensation positions who are looking to organize their financial lives, keep more of what they make, and do the things they want in retirement and even now.