Golden Handcuffs close to FI

[paideuma]

Hey all. I'm a few years out from being FI. Technically getting close now, thanks to this year's market boom. But realistically I'll be working another 2-4 years to play it safe. Currently targeting mid-2023 (age 33).

I ended up getting some company stock at work. Thing is, it's on a six year vesting schedule, which is longer than I planned on working (especially at this same company). Their conservative estimate would make it worth around ~$550k if I hold and sell it all Jan 2027. Outlook for the company looks good (might even go public), but this is all dependent on the company's performance and more so the price of the company stock in that specific year (there is only one opportunity to sell per year at the same fixed price for everyone).

Here's a rough vesting schedule (slightly rounded for simplicity/anonymity):

Sell in Jan 2022 - $20k
Jan 2023 - $50k
Jan 2024 - $100k
Jan 2025 - $160k
Jan 2026 - $300k
Jan 2027 - $550k

So there is a big inventive to stay until the end. Even "one more year" gets close to doubling it. Combined with the fact that I'd have even more savings from the extra years of working up to 2027, the extra $550k would be a huge windfall. I'd definitely be set for life (even though that's the plan anyway!), it would be a bunch of cherries on top. I could see myself paying off the house, or just having zero worries about ever having to go back to work again, less worries about health insurance in the far off future, etc. What I'm weighing is the job. Its been pretty stressful so far, but I've found that the higher up I get the more I can avoid a lot of the BS and do my own thing. I know its a personal decision, but has anyone had something like this happen to you? Was it worth sticking it out 2-4 more years than you planned on working?

[okparallax]

What do you plan on doing once you fire? If you don't have another calling or plan I don't think there's anything wrong with sticking to the job as long as you are able or are enjoying it if you don't have another thing you want to be doing.

[JGS1980]

Hey all. I'm a few years out from being FI. Technically getting close now, thanks to this year's market boom. But realistically I'll be working another 2-4 years to play it safe. Currently targeting mid-2023 (age 33).

I ended up getting some company stock at work. Thing is, it's on a six year vesting schedule, which is longer than I planned on working (especially at this same company). Their conservative estimate would make it worth around ~$550k if I hold and sell it all Jan 2027. Outlook for the company looks good (might even go public), but this is all dependent on the company's performance and more so the price of the company stock in that specific year (there is only one opportunity to sell per year at the same fixed price for everyone).

Here's a rough vesting schedule (slightly rounded for simplicity/anonymity):

Sell in Jan 2022 - $20k
Jan 2023 - $50k
Jan 2024 - $100k
Jan 2025 - $160k
Jan 2026 - $300k
Jan 2027 - $550k

So there is a big inventive to stay until the end. Even "one more year" gets close to doubling it. Combined with the fact that I'd have even more savings from the extra years of working up to 2027, the extra $550k would be a huge windfall. I'd definitely be set for life (even though that's the plan anyway!), it would be a bunch of cherries on top. I could see myself paying off the house, or just having zero worries about ever having to go back to work again, less worries about health insurance in the far off future, etc. What I'm weighing is the job. Its been pretty stressful so far, but I've found that the higher up I get the more I can avoid a lot of the BS and do my own thing. I know its a personal decision, but has anyone had something like this happen to you? Was it worth sticking it out 2-4 more years than you planned on working?

Sounds like a well designed incentive and retention plan by your employer.  If the money is good, and you get less and less BS as you move up the ladder, and you can see the huge rewards to reap in the future, I really don't see a problem here.

If you have "enough" and want to pursue other interests, you still win there as well.

[ixtap]

I would be surprised if they don't offer you more yet between now and then. At some point, you just have to walk away.

At Megacorp, this is the one advantage to official retirement, but you have to be 55 to "retire."

[mozar]

It depends on your other assets, would another 100k-150k be life changing for you?

[RedmondStash]

It's hard to walk away from golden handcuffs. But -- it's only money. And exchanging your precious time for money may not be worth it, even if it's a lot of money.

Only you can determine when you hit that point. But it's okay to prioritize your life & happiness over money, especially once you've got enough of a stash to FIRE.

Money comes and goes, but each day only comes once. When it's gone, it's gone. You can't get time back.

[plog]

I've known a few people who came a few weeks from being overnight millionaires in similar situations.  None did, so here's my jaded opinion.

I ended up getting some company stock at work...Their conservative estimate would make it worth around ~$550k...might even go public...there is only one opportunity to sell per year

'stock' is a poor term for what you received. You have no voting rights and there is no real market for this; in all but the technical sense is this stock.

Think of it as a lottery ticket put on by your company.  Take it, but don't realy expect anything from it. Then if/when you can ever exchange it for a real dollar, do it immediately.

[bacchi]

I've known a few people who came a few weeks from being overnight millionaires in similar situations.  None did, so here's my jaded opinion.

I ended up getting some company stock at work...Their conservative estimate would make it worth around ~$550k...might even go public...there is only one opportunity to sell per year

'stock' is a poor term for what you received. You have no voting rights and there is no real market for this; in all but the technical sense is this stock.

Think of it as a lottery ticket put on by your company.  Take it, but don't realy expect anything from it. Then if/when you can ever exchange it for a real dollar, do it immediately.

+1. I started working during the height of the dotcom. Some of the senior developers were briefly millionaires. A few, at the end, were planning to sell but the value didn't last until the lock-up expired; most held in the hopes that they'd become deca-millionaires.

[BikeFanatic]

I personally are doing OMY ( one more year) and I find money incentives galore to stay, my spouse also says ( even though we are over our goal) just hang in a little longer , you are making so much money now, your bonus is coming etc. I too also think If I can hang on another 3-6 more months I can stash more in 401 K and shield us from taxes Etc and etc.

But today I am giving my notice 6 months of OMY is enough! I found out it is difficult  to take the leap, but you have to at some point. Hang on until you are FI then weigh your pro's and con's. I personally can not take another 1:1 with my boss where I get criticized for low volume again, despite putting in 50 hours a week . I am just done, and if I loose my bonus so be it, it is just money as someone here said.

[paideuma]

I've known a few people who came a few weeks from being overnight millionaires in similar situations.  None did, so here's my jaded opinion.

I ended up getting some company stock at work...Their conservative estimate would make it worth around ~$550k...might even go public...there is only one opportunity to sell per year

'stock' is a poor term for what you received. You have no voting rights and there is no real market for this; in all but the technical sense is this stock.

Think of it as a lottery ticket put on by your company.  Take it, but don't realy expect anything from it. Then if/when you can ever exchange it for a real dollar, do it immediately.

+1. I started working during the height of the dotcom. Some of the senior developers were briefly millionaires. A few, at the end, were planning to sell but the value didn't last until the lock-up expired; most held in the hopes that they'd become deca-millionaires.

This was my thought process as well. Everyone at work has been treating this like it is guaranteed money and a huge benefit, and that we're all guaranteed millionaires now. But the truth is we have very little control over the price. There have been times when the price has doubled year over year, and I plan to get out if that were to happen again, even if I am not 100% vested. HR made a big deal of telling us "no one ever sells until the end/unless they have to" etc. but that immediately felt off to me, people falling prey to group-think/drinking the company kool-aid.

I almost didn't sign the paperwork because I am doubtful/skeptical of this whole thing (this is also going to make taxes slightly more complicated), thinking I wouldn't be at the company much longer. But I figured even if I make it one more year at this gig I'll get an extra $15-20k.

[paideuma]

What do you plan on doing once you fire? If you don't have another calling or plan I don't think there's anything wrong with sticking to the job as long as you are able or are enjoying it if you don't have another thing you want to be doing.

I do enjoy my job, just not the company/role I am at/in right now. I plan to take a "sabbatical" and after a year (or more) probably end up working in a completely different field, part time if possible. Otherwise, travel, time with family, gardening, the simple life (have been burnt out at work for a few years).

It's hard to walk away from golden handcuffs. But -- it's only money. And exchanging your precious time for money may not be worth it, even if it's a lot of money.

Only you can determine when you hit that point. But it's okay to prioritize your life & happiness over money, especially once you've got enough of a stash to FIRE.

Money comes and goes, but each day only comes once. When it's gone, it's gone. You can't get time back.

Definitely. I am doubtful I will make it to the end of the vesting schedule.

[MissPeach]

I agree with the others to keep an eye on whether you still like your job and the company stock pricing.

I've had two companies I've worked at have given me stock grants. Both companies' stock wound up going down as I worked there even though they were both large companies with promising direction. I held onto it a bit after but it never wound up being that great for me. The one that was taking off I hated after two years so I left the money on the take. The other was public but a little smaller and there was a panic in that industry that took 2 years to recover. It was a nice amount in the end but not enough to keep me there if I had hated the job.

As for a private company I would be a little more worried. I almost took a job at a private larger company. My friend's husband took a job there shortly after me. They company wound up being sold for a fraction of the promised value so all the stock offered wasn't worth much at all.

[Zamboni]

A cautionary tale: My ex- had stock options at two different jobs. In both cases, the company's estimates of the worth of the options were extremely inflated. He held out both times and it wasn't the big check he was hoping for. Some people at the Exec VP to CEO level made out well, but the plebes were just strung along with false promises. He made a little bit each time, but definitely not the life-changing amounts that were tossed around when he joined the companies. Then again, maybe you are at the next Apple? So who knows.

I have golden handcuffs right now in a children's tuition grant, so I'm probably going to hang on for four more years as one child is at an expensive private college. They make it a pain, though: I have to fill out paperwork every single semester. In any case, my job is fulfilling and I probably wouldn't retire, but it's a slight pain to feel tied to this one employer.

[ChpBstrd]

That's a lot of $ to walk away from. I'm gonna say something weird, given our culture of maximizing consumption.

Have you considered working for the sake of charity post-FIRE? You have this firehose of money that you get to direct anywhere you want. Meanwhile, there are charitable organizations doing worthwhile things all around you, and they're all struggling to get people to donate their morning latte money.

What if you worked past FIRE until fully vested and then dropped $100k or $200k on something that supports your values? It might be the biggest impact you make in your lifetime, and definitely more meaningful than getting a bigger house or a luxury car.

[Zamboni]

^This is a wonderful sentiment, and something everyone should consider.

[paideuma]

That's a lot of $ to walk away from. I'm gonna say something weird, given our culture of maximizing consumption.

Have you considered working for the sake of charity post-FIRE? You have this firehose of money that you get to direct anywhere you want. Meanwhile, there are charitable organizations doing worthwhile things all around you, and they're all struggling to get people to donate their morning latte money.

What if you worked past FIRE until fully vested and then dropped $100k or $200k on something that supports your values? It might be the biggest impact you make in your lifetime, and definitely more meaningful than getting a bigger house or a luxury car.

Thank you for the reply! I'll have to say this is something that feels like it was floating around in the back of my head, but I don't think I fully realized the idea of working for the sake of charity. Definitely. I think this would also help give my work a sense of meaning. What my company does feels very meaningless (not terrible, but not adding any real benefit to the world either) and I have struggled with that. It would also solve a loose end for me - employer provided health insurance - for a few more years.

Thank you again for bringing this up! Definitely changed my perspective.

[ChpBstrd]

That's a lot of $ to walk away from. I'm gonna say something weird, given our culture of maximizing consumption.

Have you considered working for the sake of charity post-FIRE? You have this firehose of money that you get to direct anywhere you want. Meanwhile, there are charitable organizations doing worthwhile things all around you, and they're all struggling to get people to donate their morning latte money.

What if you worked past FIRE until fully vested and then dropped $100k or $200k on something that supports your values? It might be the biggest impact you make in your lifetime, and definitely more meaningful than getting a bigger house or a luxury car.

Thank you for the reply! I'll have to say this is something that feels like it was floating around in the back of my head, but I don't think I fully realized the idea of working for the sake of charity. Definitely. I think this would also help give my work a sense of meaning. What my company does feels very meaningless (not terrible, but not adding any real benefit to the world either) and I have struggled with that. It would also solve a loose end for me - employer provided health insurance - for a few more years.

Thank you again for bringing this up! Definitely changed my perspective.

Another way of looking at it: The money you could make as one person working could probably cover the salaries for 2-3 people working full time every day doing good for the charity of your choice. Or it could buy a small house that shelters hundreds of homeless teens or abused women over the next 25 years. There are certainly more examples. Your leverage is huge.

[yachi]

Here are a few things to think about:

Do you agree that their estimate is conservative?

Selling what you can each year reduces your risk regarding the company's performance.

Since they are not yet public, the method for determining the price of the company shares is probably some sort of audit, so it makes sense to establish a price once per year.

How much of this money is gains projected on gains, and how much is due to the vesting of shares.