Designing the income stream portion of the AbbVie DCP is specific to your situation. Not only does it need to factor in your current situation, but also your spouse’s benefits (if applicable), desired lifestyle after retirement, and other financial assets available to you that can be sued to provide income.
As a high earner, you may find yourself in the higher federal and state tax brackets. However, if you anticipate being in a lower tax bracket in the future, such as during retirement, then deferring income to those years can lead to a lower overall tax bill on the deferred amount.
The AbbVie Deferred Compensation Plan (DCP) offers an option for high-earning and essential workers who have used up their tax-deferred savings (such as 401(k), HSA, IRA) and still want to defer income from their current tax situation.
Imagine this: even though you get AbbVie stock every year as part of the RSU program, you don't need to include that amount in your savings or overall portfolio to achieve the goals that you want to achieve. Let's explore what to do now.
Withholding on RSUs can be tricky - the rate at which you are withheld varies by company. Some companies have a flat withholding on RSUs for every employee, while others allow you to adjust it. Whether this withholding amount is enough will depend on your overall income and withholding on all sources of income.
I have worked with clients where both scenarios (selling or holding) make sense. For those building their wealth, it usually makes sense to sell the stock and purchase a diversified portfolio.
These grants will give an employee a specific number of AbbVie shares after a vesting period. After that period is up, the employee can decide to hold the stock in their accounts or sell and get cash. AbbVie provides these grants to employees each February.
The number of shares granted is determined by an employee's position within the company. The final value of the grant is the number of shares granted and the fair market value of the stock at the time each part vests. But here's the kicker, these bad boys don't vest all at once - they vest over a period of three years.
Many people believe that you can only complete a rollover when you switch jobs, but an in-service rollover allows you to move your 401(k) funds into an IRA without changing employers.
After years of strenuous work, retirement is the light at the end of the tunnel for many of us. However, what we don't realize is that this shift from gaining employment-based income to using investments as our primary source can be tougher than expected.
Social Security will provide benefits to your spouse if you are receiving the retirement benefit. This is regardless of whether your spouse has worked or not. In some cases, even ex-spouses can claim. To qualify, your spouse must be at least 62 years old.
If you want to enhance your retirement lifestyle, or are not quite ready to retire fully, then you can still work and collect Social Security benefits. However, before starting a retirement job, make sure to crunch the numbers to see how your Social Security payments will be affected.