4 Actions that senior executives retiring in 3 years should take now

We believe that everyone needs to create a viable, personalized retirement plan to help secure their financial future. However, it’s especially important for senior-level executives who typically have complex financial circumstances and want to ensure that they make the most of the wealth they’ve created.

Let’s consider an example of a senior-level executive who plans to retire in three years following a successful 30-year career in corporate America. We’ll assume that most of her income — salary, bonuses, stock options and other deferred compensation — is tied to the success of the company where she works.

To protect her money, she’ll need to take a few key steps to maximize her wealth in preparation for retirement. If you’re planning to retire soon, here are four actions you can take now to be prepared.

1. Begin to diversify your wealth

Many senior-level corporate executives have received company stock grants and equity awards over the years. For the client in our example, company stock makes up approximately 30% of her investments.

Even if you work for a successful company, it’s risky to have too much wealth tied up in the stock of any single company, regardless of how stable or successful this company may seem. The pandemic suddenly and unexpectedly created unfavorable conditions that can serve as a prime example. It quickly jolted the stock prices of many sectors, including airlines and hospitality companies. An executive with company stock valued at $1 million today wouldn’t want to see that number reduced by 20% to 30% or more, no matter the reason.

One strategy to help mitigate “concentration risk” is to sell your company stock as soon as shares vest. This move will reduce your exposure to company stock and the likelihood of paying additional capital gains taxes from holding the stock for a period of time and then selling later.

2. Understand how to manage deferred compensation

Many executives have built a substantial balance in deferred compensation plans; these funds will serve as a key source of income in retirement. Unfortunately, such executives often lack a cohesive strategy when choosing their payout elections.

Many deferred compensation plans give executives a choice of a lump-sum payment or annual payouts over a specified period of years. This choice will have a significant impact on income and taxes paid once an executive retires. Depending on your retirement age, choosing five, or 10-year distributions could provide steady annual income to bridge the gap between retirement and income you’ll receive from Social Security benefits or required minimum distributions from a retirement account at age 72.

3. Open an Individual Retirement Account (IRA) or Roth IRA for your spouse

Let’s assume that our client’s spouse has not been working for several years and does not have an IRA or Roth IRA. In this scenario, a working spouse is eligible to contribute to an IRA or Roth IRA in the name of the non-working spouse who has little or no income.

For 2022, the use of a spousal IRA strategy allows couples who are married and filing jointly to contribute $12,000 to IRAs per year — or $14,000 if they are age 50 or older, as a result of the catch-up contribution provision.

It’s important to consider income limits when determining eligibility to make tax-deductible IRA contributions, as well as non-deductible IRA contributions or direct after-tax Roth IRA contributions. Depending on your household income, you may be limited to certain options.

This is a complex strategy, so consult a tax adviser before making any decisions. For one, a person with existing IRAs funded with pretax contributions will owe taxes when converting IRA money to a Roth IRA.

4. Consider purchasing long-term care insurance

A couple of years or so before retirement is often a good time to consider buying long-term care insurance. These policies typically pay for in-home aides, nursing homes and other costs for people who can no longer adequately care for themselves.

Assuming you’re in good health, many experts say the optimal age to purchase this type of insurance is between the ages of 60 and 65. In this age range you are neither too young nor too old, making monthly premiums more reasonable.

Long-term care insurance is not the right choice for everyone. Some people decide to self-insure, deciding to invest money for the next 10 to 20 years rather than pay insurance premiums over that period. And, of course, it’s possible the insurance may not even be needed. But now is the time to investigate if it’s right for you and your personal situation.

With solid planning, most senior executives can position themselves now to reap the maximum benefits from their compensation once they decide to call it quits for their full-time working career. It could mean an increased value in their portfolio while also cutting their taxes for years to come, which leaves more money to enjoy retirement.

To find out more about preparing for retirement, please reach out to us and we’ll be happy to assist you.


Ryan Halpern, CPA, CFP®, PFS

Ryan Halpern, CPA, CFP®, PFS

Partner, Wealth Advisor

Ryan is a Certified Public Accountant, CERTIFIED FINANCIAL PLANNER™ practitioner, Personal Financial Specialist, and has earned the CFA Institute Investment Foundations™ Certificate. He received his Master of Accountancy and his Bachelor of Business Administration in accounting with honors from the University of Georgia.

Ryan joined Brightworth in 2013, and is now a partner at CI Private Wealth. Ryan started his career at Ernst & Young, concentrating on the taxation of high-net-worth individuals. He continued his career on the tax team at a multi-family office, broadening his experience with individual tax, charitable, and estate planning.

Ryan’s articles on tax and other financial strategies have been published on CNBC.com, Kiplinger.com, in Financial Advisor magazine, and in the Atlanta Journal-Constitution. Ryan is a member of the American Institute of Certified Public Accountants, the Georgia Society of Certified Public Accountants, and the Financial Planning Association.


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