When your salary is about to stop, executive retirement planning with Scotia Wealth Management checks the roadmap you already have, keeps what works and turns deferred pay and company shares into monthly withdrawals. One of the first steps is reading your deferred compensation statement for the real payout start. A specified employee of a public company generally waits six months after separation for the first payment, and many roadmaps assume month one.
A rough year for the company's share price, or a shift in tax law, can make a roadmap drawn two years ago look shaky. Say your stock is down 20 percent since the roadmap was written: the sale that was supposed to cover year one now takes a quarter more shares. Or a rule change moves the bracket you assumed. Executives in that spot rarely lack a plan. What they lack is a month-by-month line for the first two years, and the evenings to build one. We draw that line and leave the rest of the plan where it is.
When does executive retirement planning start to matter?
Executive retirement planning starts to matter about three years before your last paycheck, or as soon as deferred pay is worth more than one year of household spending, whichever comes first. At that point the job is no longer choosing investments; it is scheduling which source pays each month.
Most executives believe retirement planning means picking investments, and plenty of good advisors do that well. Take Vernon, 59, chief operating officer of a listed industrial manufacturer, and Judy, 57, a retired pharmacist. They have kept the same advisor for 15 years (hypothetical, round numbers). Their cash will come from the final salary and bonus, deferred compensation installments, sales of company shares, IRA and 401(k) money, and Social Security later. Each source has its own tax treatment and its own cutoff. We start by asking whether the current roadmap has a month-by-month line for years one and two. If the existing portfolio is sound, Scotia Wealth Management leaves it alone and works only on the cash schedule.
If your deferred pay and company shares outweigh your 401(k)
Most executives assume the payout schedule can be fixed right up to the day they leave. Under Section 409A, a change to payout timing generally has to be made at least 12 months ahead of the original payment date, and it has to delay that payment by at least five years. Vernon plans to stop at 61, so two years out is the last comfortable point. Payout-option choices have their own page; here we only flag the cutoff. Two balances say the cash schedule needs attention: deferred pay above one year of spending, and company stock above a fifth of net worth (the company-stock shortcut has its own page). Vernon's $1.1 million is about five years of their $216,000 annual spending.
Ages set the other cutoffs. Medicare starts at 65, and CMS lists the 2026 standard Part B premium at $202.90 monthly. Full retirement age is 67 for people born in 1960 or later, the SSA cuts the benefit by about 30 percent for claiming at 62, and RMDs start at 75 for that same group. For 2026 the IRS standard deduction is $32,200 for married couples filing jointly, and the 37 percent rate applies above $768,700. A year holding the last salary, the final bonus and the first installment can cross that line.
What happens if the first deferred payment arrives six months late?
For a specified employee of a public company, Section 409A generally holds separation-triggered deferred payments for six months after the last day of work. Until then nothing arrives, so the household pays six months of living costs from other sources, in Vernon and Judy's case $108,000.
Most people believe deferred pay starts the month after they leave. Vernon's January statement shows his $1.1 million paying in five annual installments of $220,000 after he leaves, ignoring growth. He and Judy spend $18,000 monthly, or $216,000 annually, so six months is 6 × $18,000 = $108,000. Selling company shares with a 10 percent basis ($280,000 on $2.8 million) to raise it would realize $108,000 − $10,800 = $97,200 of gain. Setting aside $108,000 from his last two bonuses avoids that forced sale. After the fifth installment, at about 65½, shares and savings carry the full $216,000 until Social Security at 67.
The timeline shows two gaps: months one to six before the first installment, and the stretch after the fifth installment, around 65½, until Social Security at 67.
If your deferred pay starts on separation and you are a specified employee of a public company, set aside six months of household spending in cash before your last paycheck, because the first payment generally cannot arrive sooner. Fund the reserve from the final bonuses, not from share sales in the last salary year; a sale that year creates the same $97,200 gain, just in a higher-income year. Installments paid to a former employee arrive on a W-2 with supplemental-wage withholding, which may not match the real tax, so check it against a projection. Where shares must be sold, Scotia Wealth Management picks the highest-basis lots first. Share prices fall as well as rise, and company stock can lose a large part of its value.
| Vernon's age | What happens | What to do |
|---|---|---|
| 59 (now) | Statement shows five $220,000 installments | Start a $108,000 cash reserve |
| 61 | Salary stops; six-month payment wait | Spend $18,000 monthly from reserve |
| 61½ | First $220,000 installment paid | Check withholding against projected tax |
| 65 | Medicare eligibility begins | Enroll; budget the Part B premium |
| 65½ | Fifth and last installment | Shift withdrawals to shares and IRAs |
| 67 | Full retirement age | Decide when to claim Social Security |
Still more than ten years from your last paycheck
If retirement is more than a decade away and your only open questions are this year's deferral elections and 401(k) contributions, you don't need this work yet. A yearly check of elections, plus a look at the equity compensation page, is enough for now. Come back about three years before your last paycheck, or sooner if deferred pay passes one year of household spending. This work schedules cash and taxes around retirement; it does not prepare tax returns (your CPA does), and starting too early mostly produces a schedule you'll have to redraw.
When the payout election sits untouched in a drawer
Most executives believe the election can wait until retirement is close. It can't; once the 12-month window before the first scheduled payment closes, the election is locked, and the only variable left is how you cover the gap. Careful savers who signed a five-installment election years ago and reconcile every statement still miss the six-month specified-employee wait. Vernon would then sell $108,000 of 10-percent-basis shares in a hurry and realize $97,200 of gain in whatever month the cash runs short. If the share price is 20 percent lower that month, the sale uses $135,000 of pre-drop share value, 25 percent more shares to raise the same $108,000.
When two firms pitch you, what does a good answer sound like?
A good answer asks for your deferred compensation statement and the distribution section of the plan document in the first conversation, and it raises the six-month rule if it applies to you. It also shows months one to 24 with the source of each month's withdrawals.
Executives often assume the firm with the longest projection is the most thorough. A weak answer is an allocation pie and a 30-year projection with no line for month seven. A good one says plainly which parts of your current portfolio it would not touch; at Scotia Wealth Management that is routine, since most clients arrive with a roadmap that is partly right. Before we suggest selling more shares, we estimate the gain on each lot and show it to you. Ask every firm the same fee question: what will I pay, in dollars, and where did I agree to it in writing? At Scotia Wealth Management, no fee applies that you haven't seen and agreed to in writing.
Your first retirement-income meeting with Scotia Wealth Management
Most people expect a first meeting to be a pitch about funds. This one is a working session on cash. Before it, you send the four documents listed here.
In the meeting, we go month by month through your first 24 months of cash and tell you which parts of the existing roadmap we'd keep as they are. You go home with your cutoffs written out by date (the election-change window, the cash reserve target, Medicare enrollment) and a draft month-by-month withdrawals schedule. The full roadmap follows afterward. Scotia Wealth Management holds these reviews online or by phone with people in any state. No phone number is published, so first contact goes through the request form. The minimum to start is $500,000 in investable assets.
- Your deferred compensation statement.
- The stock plan administrator's lot report.
- Your current advisor's roadmap.
- Your most recent federal return.
Common questions on executive retirement planning
Our stock plan administrator's year-end statement lists shares by lot; which lots should fund our first year of withdrawals?
We've had the same advisor for 15 years; why get a second opinion on a retirement that already looks mapped out?
If my husband dies before his deferred pay installments finish, do the remaining payments come to me?
Does Social Security timing still matter when deferred pay and company stock cover the first five years?
Sources
Other Scotia Wealth Management services
This content is general information and education only. It is not individualized investment, tax or legal advice. Investing involves risk, including possible loss of principal. Before making any financial decision, consult a professional about your own circumstances.