How to Make Decisions About Your Equity Compensation Plans, Ep #97
Financial Symmetry: Balancing Today with Retirement
Release Date: 11/04/2019
How to Prepare for the Retirement Danger Zone, Ep #214
Financial Symmetry: Balancing Today with Retirement
If you are retiring soon, you've most likely wondered if your asset allocation is too risky. Some have called the period just before and after retirement the Retirement danger zone as it's a time where understanding how you should be invested matters for your long-term financial success. After years of great returns in tech and large cap US stocks, many retirees could have bigger risks present in their allocations than they realize. In today's episode, you'll learn why sequence of return risk has been called the retirement danger zone and how to prepare for it within the context of your...
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Be Ready For These 10 Tax Surprises, Ep #213
Financial Symmetry: Balancing Today with Retirement
So many of us will be hoping for no tax surprises when preparing our tax returns this year. This is why we want to provide you with a list of common tax surprises to watch for. After working with hundreds of clients to prepare their tax returns, we’re sharing the latest tax surprises we see that could be helpful to know when completing your tax return this year. Outline of This Episode [0:42] The Slott Report [2:39] Inheritance surprises [6:51] Credit card rewards [8:10] Interest income increases [10:54] Income earned in different states [12:32] 1099Ks [14:14] Underwithholding from...
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How to Handle a Forced Early Retirement, Ep #212
Financial Symmetry: Balancing Today with Retirement
Retirement can hit us with numerous curveballs. One of those could happen right out of the gate–being forced with an early retirement. We all know that layoffs are part of the corporate landscape. While they are commonplace, when you are faced with one later in your career it can cause you to reevaluate your financial situation. In this episode, we discuss your options if you are laid off and how they fit in with your financial plan, your tax plan, and your 401K. **** 📬 Get our . 📰 See the 🌐 Explore the
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Tools for Making Better Financial Decisions, Ep #211
Financial Symmetry: Balancing Today with Retirement
While most of our listeners are in or on the cusp of retirement, many have loved ones who are earlier in their careers. Often we get questions on how our listeners and clients can help their younger family members make better financial decisions. As we celebrate International Women's Day with this episode, you’ll meet our newest CFP, Niamh Douglas. Niamh and Allison discuss some tools and strategies to help young people who are just starting out get off on the right financial foot. Resources & People Mentioned Episode 189 - BOOK - by Nick Murray BOOK - by Laura Redfern ...
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Turn Your ‘What Ifs’ into 'What's Next' with Retirement Stepping Stones, Ep #210
Financial Symmetry: Balancing Today with Retirement
Many who approach retirement view it as the ultimate goal, but you could have 30+ years to experience the retirement you've worked to build. While much of retirement planning is focused on the numbers, people often fail to intentionally plan out how they'll spend their time. In this episode, we explore some common retirement pitfalls and then ten stepping stones to help us overcome challenges you might encounter. **** 📬 Sign up for the and receive our Pre-Retirement Checklist. 🎯 Article - 📰 See the 🌐 Explore the
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5 Reasons to Consider Investing in More Than the S&P 500, Ep #209
Financial Symmetry: Balancing Today with Retirement
Many investors have been tempted to invest more, if not all, of their portfolios in the S&P 500 given the incredible run it’s had over the last decade. But today we are talking through five reasons why you should consider not making a concentrated investment only in the S&P 500. Don't let recency bias rule your decision-making on the road to your ideal retirement. **** 📬 Sign up for the and receive our Pre-Retirement Checklist. 🎯 Article - 📰 See the 🌐 Explore the
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The Challenges with Divorce in Retirement with Lesli Doares, Ep #208
Financial Symmetry: Balancing Today with Retirement
One of the biggest financial disasters that people can experience in retirement is divorce. On this episode of Financial Symmetry, Grace Kvantas chats with licensed marriage and family therapist, Lesli Doares. Lesli shares warning signs to look out for, misconceptions about keeping finances separate, and why couples should seek marriage counseling in retirement. Your marriage affects every aspect of your life. Listen in to learn how you can improve it. **** 📬 Sign up for the and receive our Pre-Retirement Checklist. 🎯 Article - by David Booth 📰 See the 🌐 Explore...
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Should I Roll My IRA into My 401K to Do a Backdoor Roth? Ep #207
Financial Symmetry: Balancing Today with Retirement
If you have rollover IRA accounts and want to make a backdoor Roth IRA contribution, this episode is for you. There are several steps involved to handle this strategy in the right way including understanding how you roll the IRA accounts to your 401k. Today we walk through five considerations you should think through before you implement a strategy to complete your Backdoor Roth contributions. **** 📬 Tips each month to help you Enhance Your Today and Enrich Your Tomorrow. 🎯 📰 See the 🌐 Explore the
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15 Surprising Financial Facts to Round Out 2023, Ep #206
Financial Symmetry: Balancing Today with Retirement
In our usual episodes, we aim to arm you with a particular insight or strategy that can help you inch closer to your ideal retirement. But, with todays show, we want to close the year by providing a list of 15 surprising financial facts about the year that you could share in a conversation with a friend or family member. We also pay tribute to the great investor Charlie Munger, by providing a few of our favorite Mungerisms. As you begin your 2024, we thank you all for listening and sharing our show. We look forward to continuing to provide you with helpful steps on your journey to reach...
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Planning for Health Insurance in Retirement Pre-Medicare, Ep #205
Financial Symmetry: Balancing Today with Retirement
If you are planning on retiring before age 65, there is no doubt that you have had this question. What do you do about health insurance? In the United States, the health insurance landscape is ever-changing and takes quite a bit of planning. Many people even feel anchored to their jobs because of the prohibitive costs of health insurance. However, there are options for healthcare before age 65. Listen in to discover what your options are and what you should be doing to plan for this complicated aspect of early retirement. Outline of This Episode [2:44] COBRA [8:04] Using...
info_outlineDoes your place of employment offer an equity compensation plan? Are you one of the 76% of people who have not exercised their stock options or sold shares of their company stocks? Mike Eklund is back after a hiatus and he is jumping in with both feet. He dives deep into the nitty-gritty of equity compensation plans. Since this can be a complicated subject you may want to consult a financial professional before making any big decisions about what to do with your company stock options.
Watch corresponding Youtube video here.
Why do companies offer equity compensation plans?
Many companies offer equity compensation plans as a part of an overall hiring package. The main reason is to align the company and employees. If the stock price goes up then you make more money. These compensation plans can be a big draw when you are trying to decide where to work. There are 4 main types of plans offered by companies.
- Employee stock purchase plans (ESPP)
- Owning stocks directly
- Restricted stock
- Incentive stock options (ISO). These are non-qualified stock options.
It is important to know how these types of plans differ and what their advantages are. What kind of equity compensation plan does your company offer?
Don’t let taxes wag the dog
The biggest question of owning stocks is when to sell. Don’t let the taxes wag the dog means don’t let taxes impact your investment decisions. So many people choose not to sell a position simply because they don’t want to pay taxes on it. It helps if you understand how the taxes work in each situation.
If you own stocks outright for over a year and sell then that is a long term gain and you will be subject to capital gains tax at the rate of 20% at most. If you own for less than a year then it is considered a short term stock and is subject to a higher tax rate of 37%. In this case, you’ll want to own for over a year for the best result.
If you own ESPP stocks then it is important to know whether you hold a qualifying or disqualifying disposition. A qualifying disposition is better. It is tied to how long you own the stock. You’ll want to own for at least a year before you sell.
Restricted stock is taxable when it is vested. Although restricted stocks are pretty straight forward your financial advisor can really help you with saving money in taxes.
ISOs can provide significant tax savings but they have many requirements. They are more tax advantageous than nonqualified stock options. You have more control over when the tax event occurs.
Ask these questions of yourself to discover how much company stock you are comfortable owning
- What percentage of my net worth is tied to the company stock today?
- How secure is the company?
- How long do you plan to stay with the company?
- Are you willing to wait it out?
- Am I comfortable with the risk of owning a large share of company stock?
- Think about your limits. How will you feel when the stock rises or falls?
What can you do if you own a lot in company stock?
If you own a lot in company stocks you’ll want to lower your risk and make sure that you are protecting yourself from a potential downturn. You can use these tools to think about how to create a framework for making better investing decisions.
- Purchase a put option. This will ensure the stock sells at an agreed-upon price.
- Trading plans allow corporate insiders to diversify stocks through prearranged stock selling plans.
- Gift it to a donor-advised fund
- Gift the stock to family or friends.
Listen in to hear how you can use a combination of these strategies to help you decide what to do when you own company stock.
Outline of This Episode
- [4:17] Why do companies offer equity compensation plans?
- [7:25] Don’t let taxes wag the dog
- [14:26] What can you do if you own a lot in company stock?
- [19:51] Some important questions to consider
Resources & People Mentioned
- CNBC article on the risks of company stock options
- Things to know before exercising your stock options
- ESPPs and taxes
Connect With Chad and Mike
- https://www.financialsymmetry.com/podcast-archive/
- Connect on Twitter @csmithraleigh@TeamFSINC
- Follow Financial Symmetry on Facebook
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