Happy July!
We hope you enjoyed this holiday weekend!
For this month’s THREE THOUGHTS, we look at:
What to do with Social Security when you don’t need it as income
Projecting retirement costs accurately
And what to do with your unvested equity and deferred compensation before leaving a job
If anyone else comes to mind as you read this, please feel free to pass it along.
1. When You Don’t Need Social Security for Income
The question we often hear: “I’ve built up enough. I don’t need Social Security to make my retirement work. How should I think about it?”
When income replacement isn’t the goal, the conversation shifts to optimization. You’ve paid into it for decades, and now you want to get every dollar you can. Short of knowing our final day on earth, there are a few strategies we can look at.
For married couples, the most important factor is usually the survivor benefit. When one spouse passes away, the surviving spouse keeps the higher of the two benefits. That often means it makes sense for the higher earner to delay claiming to maximize what a surviving spouse could receive, even if neither of them needs the income today.
There’s also a tax timing consideration. A client who retires in their early 60s with a large pre-tax IRA may benefit from a Roth conversion strategy during the window before Social Security turns on. Adding Social Security income during that window compresses how much can be converted at lower brackets. Delaying Social Security creates more room to convert tax-deferred dollars to tax-free dollars at a lower bracket.
For clients who genuinely don’t need the monthly check, Social Security often becomes something else entirely: mailbox money to invest for children or grandchildren, or a buffer they never have to think about. Clarifying what the money is actually for tends to make the timing decision a lot easier.
2. Building an Accurate Retirement Spending Baseline
The second item we want to look at is one of the foundational questions we look at with families approaching retirement.
Some high earners have relatively unbudgeted day-to-day lives. Money comes in, bills get paid, and there’s enough left over. That’s a hard-earned privilege, but it can create a real blind spot in retirement planning. We regularly see cash flow analyses where the numbers don’t add up: a client reports spending $12,000 a month, but once they begin tracking spending in preparation for retiring, they realize it’s closer to $16,000. This is fine for right now, but when you’re building portfolio projections based on cost of living, accuracy matters.
When we help clients get their spending in order, we put together our own financial hierarchy of needs:
Fixed costs: housing, recurring expenses, and other financial commitments.
Variable costs: Can be higher or lower, depending on needs and wants. All still in their own personal spending.
Occasions: We also help model costs that show up more in retirement like travel, renovations, gifts to grandkids, and that fishing boat you’ve thought about for a few years.
A lot of retirement conversations start with the portfolio: how should I be invested, how do I get a paycheck out of this? We think the more important first question is: what does this life actually cost? The income strategy follows from the answer.
3. Leaving a Job: What to Do with Non-Salary Compensation
Our last item is for those of you still in your working years: “I’m thinking about leaving my employer. I have unvested stock options, restricted stock units, maybe deferred compensation. What do I need to know before I go?”
Non-salary compensation can represent a significant portion of total pay for executives and senior professionals. Walking away without understanding what’s at stake can mean leaving real money on the table. A few categories worth knowing:
401(k) contributions: Your own contributions are always 100% yours. The employer match may or may not be fully vested, depending on your tenure and the plan's terms.
Stock options and RSUs: These typically vest on a schedule, either all at once after a set period (cliff vesting) or in installments over time (graded vesting). Unvested equity generally does not come with you when you leave.
Deferred compensation: Unlike unvested equity, earned deferred compensation is typically paid out when you separate, often in the year of departure rather than at retirement. The tax timing on this matters and is worth understanding before you give notice. The biggest consideration here is the tax consequence of a potentially large payout.
All of this information lives in your HR portal or plan documents. That’s exactly why it’s worth having someone review it with you before the decision is made, rather than after. Bringing these documents into a planning conversation, even a hypothetical one, often surfaces timing considerations that change what makes sense.
If any of these connect to a situation you’re in or approaching, we’d welcome the conversation.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.