Retirement Roadmap Experts

People often assume this, then ask me - AFTER they've made a decision: RSUs and stock options get talked about like they're the same thing. They're not.

An RSU is a promise to deliver shares once vesting conditions are met.

A stock option is the right to buy shares at a fixed price.

At a mature, publicly traded company, RSUs are typically favored because they offer predictable value once vested and liquid.

At an earlier-stage, privately held company, options are more common: they let you participate in upside growth, but that upside only becomes real value at a liquidity event that may be years away.

The tax treatment is different too. Incentive stock options may not trigger regular tax until sale, but can trigger the Alternative Minimum Tax at exercise. Non-qualified options are taxed at exercise on the spread, and again at sale on any further gain.

Two different instruments, two different tax pictures, two very different retirement-planning implications — and most people have never had someone walk them through which one they actually hold.

Healthcare and Long-Term-Care: Even the best employer equity package doesn't answer this one.

Healthcare costs before Medicare, and long-term care costs after the healthcare costs don't sort themselves out by whether your employer is public or private. They are a household-level risk that no compensation plan solves for you.

If you retire at 62, you and your spouse could be looking at two to three years of self-funded healthcare before Medicare eligibility begins.

Add long-term care exposure for either spouse, and the number most people have "budgeted" in their head is usually a fraction of what it actually costs.

Executives sometimes assume a strong equity position means this is covered. It doesn't.

Equity solves a net-worth problem. It doesn't solve a cash-flow-timing problem. Those are two different questions.

If healthcare and long-term care costs aren't a specific line item in your plan yet, that's worth closing before it's urgent.

People often ask me: "How do I turn my equity into income — without a tax surprise?"

At a publicly traded company, RSU vesting is taxed as ordinary income on the vesting date, but the shares are usually liquid enough to sell immediately and cover the bill.

Known. Manageable.

At a privately held company, that same tax bill often arrives on schedule. The shares to pay it usually don't.

This is the double-trigger vesting trap: time-based vesting plus a liquidity-event trigger that may not have fired yet.

Some executives end up financing the tax bill with a loan against stock they can't touch (don't be this person!)

That's not a rare edge case. It's a structural feature of how many private-company equity plans are built, and it deserves its own line item in your retirement income plan, not a surprise the year it happens.

If you don't know exactly how you'd cover that bill today, that's worth figuring out before it's due.

"What if the market crashes right when I retire?"

The perfect example of sequence-of-returns risk: a downturn in the first few years of retirement can permanently damage a portfolio, even if long-term averages are fine.

Executives with concentrated employer stock face a sharper version of it.

One widely cited J.P. Morgan analysis of "catastrophic decliners": public stocks that fell 70% from their peak and never recovered, found that 54% of those companies were profitable at their peak. The decline was not predictable from the fundamentals alone.

For a privately held company, that same risk doesn't show up as a falling stock price. It shows up as a down-round or a stale valuation which is arguably more dangerous because there's no daily price to warn you it's happening.

The closer you are to retirement, the less of your net worth should be riding on a single employer's stock, public or private.

If you haven't stress-tested your plan against this, that's worth knowing now, while you still have options.