Pre-retirement Coordination Guide

Why this guide exists
Most retirement content is written for the average American household. The framework — Social Security claiming, 401(k) rollovers, the four-percent withdrawal rule, healthcare bridge planning — assumes a standard wealth picture: a primary residence, a few hundred thousand in qualified accounts, modest taxable savings, and Social Security as a meaningful percentage of retirement income.

Senior executives don't fit that template. By the time an executive is three to seven years from transition, the wealth picture typically includes:

- A 401(k) plus catch-up contributions
- Multi-year nonqualified deferred compensation balances
- Significant accumulated RSU, ESPP, and exercised option positions in employer stock
- One or more concentrated stock positions from prior liquidity events
- Earned income two to ten times higher than what Social Security would replace
- An estate large enough to require active gift and trust planning
- Often, equity in private businesses or real estate beyond the primary residence

The decisions that determine whether this wealth picture supports the next thirty years are made in the three-to-seven-year window before active employment ends. They're not the same decisions an average retiree faces. They're not handled well by generic retirement planning frameworks.

This guide is the framework Lake House Private Wealth Management uses to coordinate pre-retirement decisions for executive families. It's not a substitute for legal or tax advice. It's the map of what to think about, in what order, before each window closes.

The pre-retirement window is patient compared to an M&A event — but the cumulative cost of missed coordination is just as large. Often larger.

The 7-3-1 framework
Lake House organizes pre-retirement coordination around three time horizons:

1. Seven years out (the planning horizon) — when the major structural decisions about asset location, equity unwinding, and tax positioning are still flexible
2. Three years out (the execution window) — when deferred compensation elections, healthcare bridge planning, and state residency decisions need to be locked in
3. The final year (the transition) — when the actual mechanics of stepping out of active employment are executed
Each window has its own decision architecture, and each decision is harder to make once the window closes.

Window 1: Seven Years Out — The Planning Horizon
The most important planning work happens early, when the most powerful tools are still available and the highest-leverage decisions can still be made.

A. Mapping the full wealth picture
The starting point of pre-retirement coordination is an honest inventory of every component of the executive's wealth — many of which are typically held by different professionals and not integrated.

A complete inventory includes:

- 401(k), 403(b), or 457(b) balances, including catch-up contribution capacity
- Traditional and Roth IRA balances
- Nonqualified deferred compensation balances with distribution schedules
- Vested and unvested RSU positions across multiple grants
- Unexercised and exercised stock option positions, with strike prices and expiration dates
- ESPP holdings and accumulated employer stock from years of participation
- Concentrated stock positions from prior liquidity events or inheritances
- Taxable brokerage account balances and cost basis information
- HSA balances, including the executive's lifetime medical expense receipts that haven't yet been reimbursed
- Real estate (primary residence, vacation properties, investment properties)
- Private business interests, if applicable
- Estate plan documents, including the lifetime gift exemption already used

This inventory is the foundation. Without it, every subsequent decision is being made in fragmented context.

B. The tax-bracket arbitrage opportunity
For executives, the seven-year window before retirement is often the most valuable tax-planning window of their entire lives. Reason: they're still earning at peak rates (32%-37% federal bracket), but they have visibility into a future window of substantially lower brackets (12%-24%) in the years between retirement and Required Minimum Distribution age (currently 73 for most executives).

The arbitrage tools:

- Roth conversions in low-income years: typically the first 5-10 years of retirement, before Social Security and RMDs push income back up
- Capital gains realization in low-bracket years: at the 0% or 15% LTCG bracket, depending on retirement-year taxable income
- Charitable bunching: concentrating multiple years of giving into peak-earning years for higher tax benefit, then using less or none in retirement
- Estate gift acceleration — using the current $13.99 million (2025) lifetime gift exemption before the 2026 sunset cuts it roughly in half

Coordinated planning models all four of these across a 10-15 year horizon, identifying which tools work best in which years.

C. Equity wind-down strategy
For most senior executives, employer stock represents 30-60% of total net worth at the seven-year mark. The wind-down decision is one of the highest-impact in pre-retirement planning.

The wind-down framework:

- Concentration target: what percentage of net worth should remain in employer stock at retirement (typically 5-15%, depending on the executive's situation and the company's outlook)
- Multi-year sell-down calendar: sequencing sales across tax years to manage bracket creep and avoid concentrated capital gains years
- Direct indexing for tax-loss harvesting: using a custom-built equity portfolio with hundreds of individual positions to generate offsetting losses against the concentrated sale gains
- Charitable contribution timing: donating appreciated shares to charity at peak valuation while replacing with cash purchases of diversified positions
- 10b5-1 trading plan establishment: for executives in officer or director roles, formalized trading plans to permit sales during company blackout periods

The wind-down typically takes 24-36 months to execute well. Starting at the seven-year mark gives the executive time to do it without forcing concentrated sales into a single tax year.

D. NQDC distribution architecture
Nonqualified deferred compensation balances are often the largest single planning variable in pre-retirement coordination. Distribution elections — made over years of October decisions — determine how the deferred balance comes back into income.

Common distribution structures:

- Lump sum at separation: fast but creates a single very-high-income year that wastes lower brackets in subsequent years
- 5-year installments: moderates the income impact but still bunches into one window
- 10-year installments: typically the most tax-efficient structure for senior executives
- 15-year installments: for executives with very large balances who want to extend income across multiple low-bracket years
- Specific-date elections: distributions tied to age 65, 70, or other milestones

The seven-year mark is often the last meaningful opportunity to influence the distribution structure for current-year NQDC deferrals. Past deferrals are typically locked into their original distribution elections (Section 409A regulations make changes very difficult).

For executives with the option to make new deferrals in the seven-year window, the question is: should they continue deferring or not?

The answer depends on:

- Confidence in the employer's financial stability (NQDC is an unfunded creditor claim)
- Expected post-retirement tax bracket
- Cash flow needs in the current year
- The plan's investment options and effective return

For executives at financially stable, large-cap employers heading into retirement with significant earned-income tax brackets, continued NQDC deferrals usually make sense. For executives at smaller or distressed employers, reducing or eliminating NQDC deferrals in the final years often makes sense.

E. Estate planning refresh
The seven-year mark is when most executive families undertake their first comprehensive estate planning refresh in many years. Several factors converge:

- The 2026 sunset of the Tax Cuts and Jobs Act doubling of lifetime gift exemption (current ~$13.99M will drop to ~$7M)
- Significant wealth accumulation since the last refresh
- Approaching retirement clarifies long-term family wealth transfer goals
- Children may now be adults with their own asset bases

Common planning moves in this window:

- Spousal lifetime access trusts (SLATs) to use exemption before the sunset
- Grantor retained annuity trusts (GRATs) funded with concentrated employer stock that has continued appreciation potential
- Charitable remainder trusts (CRTs) for executives wanting income from contributed appreciated positions
- Generation-skipping trusts for multi-generational planning
- 529 plan funding for grandchildren, with optional 5-year accelerated contributions

Lake House coordinates with the executive's estate attorney on these decisions, providing financial modeling and integration with the broader pre-retirement framework.

Window 2: Three Years Out — The Execution Window
By the three-year mark, the structural decisions are largely made. The remaining work is execution-heavy and time-sensitive.

A. Healthcare bridge planning
For executives planning to retire before age 65 (Medicare eligibility), healthcare coverage becomes one of the most important and most under-planned pre-retirement decisions.

The options:

- Employer-provided retiree health benefits: increasingly rare, but valuable when available
- COBRA: typically 18 months of continued employer coverage, often the bridge for executives retiring within 18 months of Medicare eligibility
- ACA marketplace coverage: open to anyone, but premiums for healthy executive households can be $20,000-$40,000+ annually for comprehensive coverage
- Spouse's employer coverage: if the spouse continues working
- Short-term medical insurance: limited use case, generally not appropriate for executives

For executives retiring at 58-62, the healthcare bridge can cost $80,000-$200,000+ over the gap years. Coordinated planning includes:

- Confirming whether retiree health benefits exist and the eligibility requirements
- Modeling the total bridge cost across scenarios
- Coordinating with HSA balances (which can pay premiums for some bridge coverage types)
- Aligning the retirement date with healthcare considerations when flexibility exists

B. State residency decisions
For executives with flexibility on where they live, the three-year window is often when state residency optimization becomes a real planning variable.

The mechanics vary by state, but the highest-impact decisions typically involve:

- Moving from a high-tax state (CA, NY, NJ) to a no-income-tax state (FL, TX, NV, WA, TN) before the major NQDC distribution years
- Establishing genuine residency well before the year of major income recognition (often 24+ months to satisfy state residency tests)
- Coordinating residency timing with the timing of equity sales, NQDC distributions, and Roth conversions

State residency for high-income executives is genuinely complex. Several states are aggressive in pursuing former residents. The work involves not just changing a driver's license but actually establishing the executive's life center in the new state — voter registration, primary doctors, social networks, time in residence.

Lake House coordinates with the executive's CPA and (often) a state-residency specialist attorney on these decisions.

C. Social Security claiming strategy
For senior executives, Social Security is rarely the dominant retirement income source — but the claiming decision still matters, often by tens of thousands of dollars over a lifetime.

Key considerations:

- Full Retirement Age (FRA) vs. delayed claiming to 70: the 8% per year delayed retirement credit is one of the few guaranteed-return investments available to a retiree
- Spousal coordination: particularly when one spouse has significantly higher earnings history
- Survivor benefits: for executives concerned with surviving spouse financial security
- Tax interaction: Social Security taxation is income-sensitive; claiming timing affects bracket management

For most senior executives, delayed claiming to 70 (or to age 67-69) is the optimal strategy. The exceptions involve specific health circumstances or unusual income patterns.

D. The transition narrative
The three-year window is when the executive begins to develop the narrative of their retirement — what they'll do, how they'll spend their time, what kind of structure they want in their post-employment life.

This isn't primarily a financial planning question. But it shapes the financial planning meaningfully:

- Executives planning to consult or sit on boards have continuing earned income that affects bracket management
- Executives planning to volunteer or take board positions have different cash flow needs than executives planning to travel extensively
- Executives planning a second career or business venture have different liquidity needs
- Executives planning to relocate have housing transition costs

Coordinated planning surfaces these questions deliberately at the three-year mark, well before the executive faces them under time pressure.

Window 3: The Final Year — The Transition
The final year before retirement is execution-focused. Most strategic decisions are already made; the remaining work is mechanics.

A. The final year tax window
The year of transition is often unusual: partial year of executive compensation, partial year of post-retirement income (or no income), often a year of bunched income recognition from accumulated equity vests, accrued bonuses, and final-year deferred compensation.

This single year can offer unusual planning opportunities:

- A higher-bracket window for accelerating charitable giving
- A lower-bracket end-of-year window for Roth conversions (if compensation ends mid-year)
- A bracket-arbitrage window for capital gains realization

The specific opportunities depend on the timing of the transition relative to the calendar year. A January retirement creates different planning than a June retirement.

B. NQDC distribution initiation
For executives whose NQDC distributions begin at separation, the final year is when the distribution schedule begins executing. The actual mechanics involve:

- Confirming the distribution schedule with the plan administrator
- Coordinating with the company's payroll/HR processing
- Managing tax withholding on the first distribution payments
- Coordinating with cash flow needs in the months immediately after employment ends

C. Equity finalization
The final year typically includes:

- Final RSU vest events (sometimes accelerated; sometimes pro-rated based on the separation timing)
- ESPP final purchases and disposition decisions
- Final option exercises before expiration windows close
- Coordination with the employer's stock plan administrator on transfer of shares to brokerage accounts
- 10b5-1 trading plan wind-down for officers and directors

D. Document and identity transitions
The administrative mechanics that often get overlooked:

-Updating beneficiary designations on all accounts (a meaningful percentage of executives have outdated beneficiaries from years earlier)
- Coordinating estate document updates to reflect post-employment circumstances
- Establishing or updating powers of attorney and healthcare directives
- Coordinating the executive's email and digital identity transition (corporate accounts close at separation)
-LinkedIn and professional identity updates

These aren't financial planning decisions per se, but they're moments when coordination across the executive's professional team — wealth advisor, attorney, CPA, HR — matters.

Integration: Where the three windows meet
The three windows don't operate in isolation. The decisions made at the seven-year mark constrain the options available at the three-year mark, which in turn constrain the final-year mechanics.

Three integration points matter most:

A. The forward income model
Coordinated pre-retirement planning builds a forward income model that projects:

- Earned income through expected retirement date
- Equity vest and exercise income
- NQDC distribution income across the chosen schedule
- Investment account distributions
- Social Security income
- Required Minimum Distributions starting at age 73
- Other income (consulting, board fees, business income)

This model becomes the planning anchor. Every subsequent decision — Roth conversions, charitable bunching, equity sales, state moves — gets tested against the model.

B. The tax-bracket map
Built from the income model, the tax-bracket map identifies:

- Peak-bracket years (typically the last 3-5 working years)
- Low-bracket years (typically the first 5-10 retirement years, before Social Security and RMDs)
- Mid-bracket years (after RMDs begin)

Each tool — Roth conversion, charitable contribution, equity sale, NQDC distribution — gets allocated to the year where its tax benefit is highest.

C. The concentration unwind calendar
For executives with significant employer stock exposure, a 24-36 month unwind calendar maps:

- Pre-determined sale amounts in each window
- Coordination with the tax-bracket map (selling more in lower-bracket years)
- Replacement diversification investments
- Charitable rebalancing (donating shares while purchasing diversified positions)
- 10b5-1 trading plan coordination for officers and directors

Where this work usually goes wrong
Three patterns explain most of the value left on the table:

- Pattern 1: The wealth advisor isn't running pre-retirement coordination. Most generalist wealth advisors handle the investment portfolio but don't proactively model the multi-year tax bracket map, the NQDC distribution schedule, or the concentration unwind calendar. By the time the executive realizes the work isn't being done, the seven-year window is closer to three.

- Pattern 2: The CPA sees it at tax time. The CPA's annual cycle is reactive — preparing returns for what happened. Pre-retirement coordination requires forward modeling across 7-10 years. That's not a service most CPAs deliver, even for senior executive clients.

- Pattern 3: HR and the company don't drive these decisions. The company processes the employment side — payroll, equity grants, NQDC plan administration. Coordinating the executive's full picture across the seven-year window is the executive's responsibility, not the employer's.

Lake House operates as the coordinating quarterback across these professionals — running the forward model, surfacing decisions on a calendar, and ensuring the right professional is in the room for each conversation.

What Lake House does in this work
Three things specifically:

Multi-year tax modeling. Within our scope as an SEC-registered investment adviser, Lake House provides forward tax projections that integrate earned income, equity vesting, NQDC distributions, Social Security, RMDs, and other income sources across 10-15 year horizons. The specific tax filing work is performed by the executive's CPA, with Lake House providing the planning framework.

The annual coordination cycle. Lake House runs a structured annual planning cycle for pre-retirement clients — revisiting the forward model, refining the tax-bracket map, surfacing decisions before windows close, and coordinating with the executive's CPA, estate attorney, and HR contacts.

Long-arc relationship. Pre-retirement coordination isn't a one-time project. Lake House typically engages with executive families across the full 7-10 year horizon, then continues through the transition and post-retirement years.

Who this guide is for
This guide is written for executives who are:

3 to 7 years from anticipated retirement or major career transition
In senior leadership at a public or private company, with multi-component compensation (equity, NQDC, base, bonus)
Recognizing that the standard retirement planning frameworks don't fit their wealth picture
Either currently working with a generalist wealth advisor who isn't running pre-retirement coordination, or without a wealth advisor and aware that the work isn't being done
The principles also apply to executive families navigating early retirement, founders preparing to exit their companies, and executives at major career transition points (not just retirement).

Next steps
If you're three to seven years from a transition you've been quietly thinking about, the most valuable next step is usually a conversation that maps where you are in the timeline against the planning windows that remain.

Lake House offers a confidential, 30-minute Discovery Call to do exactly this. No pitch. No obligation. Just a clear read on which windows are still open and what the highest-leverage moves look like from where you sit.

[Schedule a Discovery Call →]

About Lake House
Lake House Private Wealth Management is an independent fiduciary wealth advisory firm headquartered in Yardley, Pennsylvania, serving executive families across the Philadelphia–Princeton corridor and nationwide. Lake House is a DBA of MGO One Seven, LLC, an SEC-registered investment adviser.