Written by Hazel Secco, CFP®, CDFA®
Equity compensation plays a major role in retirement planning for many women in leadership and executive roles. Stock options, restricted stock units (RSUs), and performance shares can significantly increase long-term wealth—but they also introduce complexity around taxes, investment risk, and timing decisions.
If you’re a high-earning professional juggling equity compensation alongside a 401(k), bonuses, and other financial goals, it’s common to feel unsure about how everything fits together. Questions like when to sell company stock, how equity impacts retirement planning, and how to avoid being over-concentrated in one investment often come up—but rarely have simple answers.
In this guide, we’ll break down how equity compensation fits into a holistic retirement strategy for women, key decisions to consider as your career and income grow, and practical ways to align your equity awards with your long-term financial goals. We’ll also share how working with a fiduciary financial advisor can help you move from reactive decisions to confident, intentional planning.
You don’t have to navigate equity compensation alone. With the right strategy, your equity can support the life you’re working so hard to build.
Why Equity Compensation Matters in Retirement Planning for Women
Equity compensation can play a powerful role in retirement planning for women, especially those in leadership and executive roles. When used intentionally, it can help bridge retirement savings gaps and allow you to participate directly in your company’s long-term growth.
Understanding how to make the most of stock options, RSUs, and employee stock purchase plans (ESPPs) is essential for building a confident and flexible financial future.
Closing the Retirement Savings Gap
Women often face unique challenges when it comes to retirement planning. One major factor is the persistent gender pay gap—women earn, on average, about 83 cents for every dollar men earn. Over time, this can lead to lower lifetime savings, reduced Social Security benefits, and potential retirement shortfalls.
This is where equity compensation can make a meaningful difference.
When thoughtfully managed, equity awards like stock options, RSUs, and ESPPs can significantly boost long-term savings—especially for women who have experienced career pauses, caregiving responsibilities, or slower wage growth earlier in their careers.
That said, equity compensation works best when it’s part of a bigger plan.
Maximizing your employer-sponsored retirement benefits—such as fully capturing your 401(k) match—is a foundational step. Reviewing your plan documents carefully helps ensure you’re not leaving valuable benefits on the table.
I often see high-achieving women, especially in pharma and corporate leadership, who are excellent savers. But saving alone isn’t enough. Where you save matters just as much as how much you save.
If you could direct each dollar to an account that gives you a better bang for your buck—tax-wise, growth-wise, or flexibility-wise—wouldn’t that be worth considering? Strategic prioritization can turn strong saving habits into long-term financial confidence.
Leveraging Company Growth—Without Taking on Too Much Risk
One of the biggest advantages of equity compensation is the opportunity to share in your company’s success. As the company grows, the value of your equity awards may grow as well—sometimes significantly.
In certain cases, a single equity grant can become a meaningful portion of someone’s overall net worth. That growth potential makes equity compensation especially helpful for women working to close retirement gaps created by lower pay or time away from the workforce.
However, growth potential comes with risk.
Holding too much company stock can leave you overexposed to one employer—your income and your investments tied to the same place. As retirement approaches, diversification becomes even more important to protect what you’ve built.
To use equity compensation wisely, it helps to:
- Understand your equity plan Know your vesting schedules, exercise windows, and expiration dates.
- Plan for taxes before taking action Equity decisions often trigger taxes—sometimes unexpectedly—so timing matters.
- Integrate equity into your full retirement strategy Company stock should complement, not dominate, your overall portfolio.
- Build a plan that reflects your life, not just the numbers Your strategy should align with your values, priorities, and long-term vision.
When equity compensation is aligned with your broader goals, it can become a powerful tool—not a source of stress—in your retirement planning journey.
Creating a Personalized Strategy with the Right Financial Advisor
Managing equity compensation while planning for retirement doesn’t have to feel overwhelming or confusing. With the right financial advisor by your side, you can turn complex decisions into a clear, intentional strategy that supports both your financial goals and your life goals.
A personalized approach makes all the difference. Instead of reacting to vesting schedules, tax bills, or market swings, you can move forward with confidence—knowing each decision fits into a bigger picture.
Integrating Equity Compensation with Your Life Goals
Your equity compensation is more than just a line item on your compensation statement. When used thoughtfully, it can help you reach meaningful milestones in your life.
That might include:
- Buying or upgrading a home
- Funding education for your children
- Taking a career break or transitioning into more fulfilling work
- Supporting charitable causes that matter to you
- Creating flexibility to retire on your own terms
Rather than treating equity compensation as a standalone decision—sell or hold—it works best when it’s intentionally aligned with what you value most. A well-designed plan helps you decide when and how to use your equity in a way that supports your broader vision for your life.
Preparing for Market Volatility as Retirement Approaches
Market ups and downs can feel especially stressful as retirement gets closer. When a large portion of your wealth is tied to company stock, that uncertainty can feel even more intense.
Having a clear strategy in place helps reduce anxiety and replaces guesswork with clarity. This may include:
- Diversifying away from concentrated company stock
- Coordinating equity decisions with tax planning
- Reviewing asset allocation as your timeline changes
- Stress-testing your plan against different market scenarios
The goal isn’t to avoid risk entirely—it’s to manage it thoughtfully so market volatility doesn’t derail your long-term plans.
A Financial Plan That Grows with You
Your life isn’t static—and your financial plan shouldn’t be either.
As your career evolves, your family changes, or your priorities shift, your equity compensation strategy needs to adapt alongside you. Regular check-ins with a financial advisor help ensure your plan stays aligned with your goals, values, and timeline.
A strong plan grows with you—offering flexibility, clarity, and confidence—so you can focus less on financial stress and more on enjoying the life you’re building.
Frequently Asked Questions
What are some common mistakes in retirement planning?
One of the biggest mistakes is not having a clear picture of what you want your retirement to look like. Without a vision—how you want to spend your time, where you want to live, and what matters most—it’s hard to build a plan that truly supports your goals.
Another common misstep is treating each investment account separately instead of viewing everything as part of one coordinated strategy. When accounts aren’t aligned, it can lead to missed tax opportunities, unnecessary risk, or inefficient use of your savings.
What is the 4% rule?
The 4% rule is a general guideline that suggests you can withdraw about 4% of your retirement savings each year without running out of money. While this rule has been helpful historically, longer life expectancies and changing market conditions have led many experts to recommend a more conservative withdrawal rate—often closer to 3%—to help your savings last throughout retirement.
Because everyone’s situation is different, this rule should be treated as a starting point, not a one-size-fits-all solution.
What happens to unvested stock options or RSUs when I retire?
In most cases, unvested equity awards—such as RSUs or stock options—are forfeited when you retire. However, the exact outcome depends on your company’s plan rules and, in some cases, your retirement date or employment agreement.
That’s why it’s important to review your equity plan details ahead of time and coordinate your retirement timeline with your broader financial strategy.
Planning for retirement is about more than just saving money—it’s about creating a future that allows you to live the life you want, with clarity and confidence. And when equity compensation is part of your picture, having the right strategy in place can make all the difference.
Set up a 20-minute introductory call with us. We’re here to make things clearer, simpler, and more intentional—so the money you’ve worked so hard for can start working for you.
References
https://www.morganstanley.com/atwork/articles/women-retirement-stakes-higher
https://medium.com/illumination/role-of-stock-option-exercise-in-retirement-planning-a1631f6a2fd5