If you’re in your 50s or 60s working at a tech company in Southern California, you’ve likely accumulated a complex web of stock options, RSUs, and perhaps even ESPP shares. You’re also probably closer to retirement than you’d like to admit. The question I hear most often from late-career tech professionals in Pasadena: “What do I do with all this equity?”

The answer isn’t simple, but it’s critical to get right. After helping dozens of clients navigate this transition, I’ve learned that equity compensation strategy in your 50s and 60s looks completely different from what made sense in your 30s and 40s.

The 50+ Equity Landscape Is Different

In your 50s how you approach your financial plan and equity compensation shifts. While you still have a long term time horizon your focus begins to move toward income strategies and diversifying that concentrated equity position that represents such a significant part of your net worth.

I worked with a software engineer at a major tech company here in Pasadena who came to me at 58. Nearly 70% of his $2.3 million net worth was in his employer’s stock. He’d worked there for 22 years, and the stock had performed brilliantly. But he was three years from retirement and one bad earnings report away from watching a substantial portion of his retirement security evaporate.

That’s the reality many late-career tech professionals face. The equity that built your wealth can also threaten it if you’re not strategic about managing it as retirement approaches.

Assessing Where You Stand Today

Before making any moves, you need a clear picture of what you’re holding. Grab your most recent equity compensation statements and categorize everything:

Vested RSUs and options you can exercise now represent immediate liquidity, though exercising options requires cash and creates a taxable event. Unvested RSUs and options that will vest in the next 1-3 years need to be factored into your planning, especially if you’re considering retirement soon. Company stock you’ve purchased through an Employee Stock Purchase Plan might have significant embedded gains. Stock options that are underwater (exercise price above current market price) may never be worth exercising, so don’t factor them into your retirement calculations.

Next, calculate what percentage of your total net worth is tied to your employer. Include everything: 401(k) company stock, RSUs, ESPP shares, and exercised options you’ve held. If it’s more than 10-15% of your total portfolio, you’re taking on concentration risk that gets riskier the closer you get to retirement.

Finally, understand your tax situation. In California, equity compensation can push you into some of the highest tax brackets in the country. State income tax, federal income tax, and potentially the 3.8% net investment income tax all take a bite. Knowing your tax picture helps you time equity decisions strategically.

Strategic Moves for Your 50s

Your 50s are your power decade for equity compensation strategy. You likely have peak earning years ahead, but retirement is visible on the horizon. Here’s what to focus on.

Start systematic diversification, even if the stock is still climbing. I typically recommend selling 10-25% of your vested equity each year and reinvesting in a diversified portfolio. Yes, you might miss out on some gains if the stock continues its run. But you’re also protecting yourself from a significant loss that you don’t have time to recover from.

A client who worked at a tech company in the San Gabriel Valley started this strategy at 54. His company’s stock had been on a tear, and it felt painful to sell at first. But when the stock dropped 38% during a market correction two years later, he was grateful he’d already moved nearly 30% of his holdings to diversified investments. He still participated in the upside when it recovered, but his overall portfolio was far less volatile.

Consider exercising and holding some Incentive Stock Options (ISOs) if you have them. ISOs can receive preferential tax treatment if you hold the shares for at least one year after exercise and two years after the grant date. But this strategy requires cash to exercise and creates Alternative Minimum Tax (AMT) implications. In California, AMT can be particularly painful, so model this carefully.

Look at your 401(k) allocation. If you’re already heavily weighted to your company stock outside the 401(k), make sure your retirement plan contributions are going to diversified investments, not more company stock.

For ESPP shares, develop a sell discipline. These shares often come with built-in gains thanks to the purchase discount. Consider selling immediately upon purchase to lock in the discount as ordinary income (taxed anyway) and avoid concentration risk. Or set a target hold period, like six months for long-term capital gains treatment, then sell systematically.

Strategic Moves for Your 60s

Your 60s require an even sharper focus. Retirement is likely 1-10 years away, and protecting what you’ve built becomes more important than maximizing growth.

Accelerate diversification. If you’re 60-65 and still holding 30-40% of your net worth in company stock, it’s time to move more aggressively. I often recommend getting that concentration down to 10% or less by retirement. This might mean selling larger chunks each year, even if it means higher taxes in the short term.

A client I worked with was hesitant to sell and pay California’s high tax rates. We modeled his situation and found that even after paying 37.1% combined federal and state tax (plus 3.8% NIIT), he was still protecting significant wealth from potential downside. Two years later, his company faced regulatory headwinds, and the stock dropped 45%. He thanked me repeatedly for pushing him to diversify.

Plan around vesting schedules and retirement timing. If you’re planning to retire at 63 but have a large RSU grant vesting at 64, it might make sense to delay retirement by a year. Or if you’re planning to work until 66, see if you can negotiate an acceleration of unvested equity as part of your retirement package.

Use Qualified Small Business Stock (QSBS) treatment if applicable. Some startup equity, if held for five years, can qualify for a significant capital gains exclusion under Section 1202. If you joined a startup in your 50s, this could be valuable as you approach retirement.

Consider charitable giving strategies for highly appreciated stock. Donating appreciated employer stock to charity or a donor-advised fund can be more tax-efficient than selling the stock and donating the proceeds. You avoid capital gains tax and get a charitable deduction for the full fair market value.

The California Factor: State Tax Implications

Living and working in California adds an extra layer of complexity to equity compensation planning. California’s top marginal rate of 13.3% means equity compensation is taxed more heavily than in most other states.

Some tech professionals I work with consider establishing residency in another state before exercising large option positions or before RSUs vest. But this is a complex strategy with significant lifestyle implications, and California’s Franchise Tax Board closely monitors these moves. You need clear documentation of your residency change, and you can’t just claim you moved while continuing to live primarily in Pasadena.

More commonly, California residents should focus on timing. If you expect to be in a lower tax bracket in a particular year (maybe you took a sabbatical or retired mid-year), that’s the time to exercise options or sell highly appreciated shares.

Also consider Roth conversions in the same years you’re realizing equity compensation income. It seems counterintuitive to add more taxable income when you’re already in a high bracket, but if you’re going to be in the top bracket anyway from equity compensation, you might as well convert some IRA funds to Roth while you’re there. You’re already paying the tax rate; you might as well get maximum benefit from it.

Common Mistakes to Avoid

The biggest mistake I see is waiting for the stock to “get back to” a previous high before selling. If your employer’s stock has dropped and you’re thinking, “I’ll sell when it gets back to $200,” you’re anchoring to an arbitrary number. The stock doesn’t know or care what you paid for it or what it used to be worth.

Another frequent error: exercising options without a sale plan in place. You need cash to exercise, and you’ll owe taxes on the spread between the exercise price and fair market value. Don’t exercise and hold unless you’ve modeled the tax impact and have a clear investment thesis for holding the shares.

Ignoring the AMT trap with ISOs is another costly mistake. Alternative Minimum Tax can hit you hard in California, potentially negating the tax benefits of ISOs entirely. Always model the AMT impact before exercising.

Finally, many late-career professionals fail to coordinate equity compensation with their broader retirement plan. Your equity shouldn’t be viewed in isolation. It’s part of a comprehensive strategy that includes your 401(k), IRAs, taxable accounts, Social Security timing, and retirement income needs.

Building Your Personal Strategy

Every late-career tech professional’s situation is unique. Your company’s prospects, your other assets, your retirement timeline, your risk tolerance, and your income needs all factor into the right strategy for you.

Start by getting organized. Know exactly what you own, when it vests, and what the tax implications are. Then model different scenarios. What happens if the stock doubles? What if it gets cut in half? Can you still retire comfortably?

Work with advisors who understand both the technical aspects of equity compensation and the California tax environment. The wrong move can cost you tens of thousands in unnecessary taxes or expose you to concentration risk at exactly the wrong time in your career.

The Path Forward

If you’re in your 50s or 60s and holding significant equity compensation, the time to develop a strategy is now, not when you hand in your retirement notice. Systematic diversification, tax-efficient timing, and integration with your broader retirement plan can help you convert your accumulated equity into sustainable retirement security.

The equity that helped build your wealth deserves the same thoughtful planning you’d give to any other major financial decision. Don’t let inertia or emotional attachment to your company’s stock put your retirement at risk.