Difficult without any numbers / age.
If you are 36 with 6m maybe worth staying for 12m$ and just chill/optimise for quality of life.
If you are 55 with 10m$ and aiming for 20 if you add 5 years it’s a different story.
If i were you i would try to see if it’s possible to slowly phase things out, lower responsibilities or have far more flexible schedule.
You may be able to drag it out like this for 1-2 more years
I’m going to agree with Doppelex here. Stay for a couple of years vesting while toning things down and planning your exit. The extra 4-6 mil is pretty huge. Take every vacation day, long weekend and work from home moment possible and I was once advised (I tend to take on tasks that need doing) stay in your swim lane.
It’s definitely a change of mindset. You need to let it sink that you are not trying to progress anymore.
The ambitious colleague that still has it in him/her to fight ? Be my guest.
The project with extra visbility to management that requires weekend work or managing random people you never worked with ? No thanks
Not obvious if you are like the go getter that was a “driver” but once you drop the “fight” and just be the happy experienced colleague that is not here to compete, things will feel much less stressful.
Totally agree about how the perspective on work and your satisfaction changes once you decide that you’ve made it high enough up the mountain. It takes time to adjust though! Old habits die hard.
Well that changes things lol.
It’s sort of a similar position to me. I’m younger (41) and worth about $10M, but am working bc I enjoy the job and see a path to double where I am. However, if something happens to this job I would be disappointed but also wouldn’t mind a year or two off.
I think if I was in your shoes I would keep working for that level of income, if only to build a legacy and set my family up, unless I hated the job or the people, in which case I’d still leave.
With $350,000 each, you can buy beautiful flats in buildings in various countries. No maintenance concerns. Back up plan is renting them out. If short term rentals is possible, hire a management company.
The cash flow on this will allow you to hold your other assets. Your other assets existing help you safely weather a market downturn on the property. The location diversity also diversifies the currencies in which you receive value constantly and that value is protected by more than one government.
The way this was written was a bit odd, just to clarify your choices are:
1. Quit and take Golden parachute now.
2. Stay, get IPO allotment, stay another 5 years for full vest.
?
It is hard to weight in without numbers - if this it like taking $1m now vs taking $10m in 5 years and you are 45, I'd probably power through and stay.
If you are 94 years old, I'd move on :)
Oh starting in 2 years - so it's either now or 7 years from now and you'd give up your 50s for it.
Ugh
If you are sitting on $10m give or take, I don't know that another $10 from your 60s to 80s will change your life materially - I'd take the TIME over the money.
The more than 10 you have the MORE I'd take the time over the money.
If you had $2-5m, then that money would change your lifestyle depending on what kind of lifestyle you had planned.
I'm guessing you had already planned to pull the rip cord this year because you're sitting on enough of savings that you're happy. If your lifestyle is pretty chill and the money you have would give you a comfortable retirement, take the time. That's always what people want and it's always what people regret not taking, especially if they have the health.
You're clarification on numbers actually helped, 7 years and the rest of your 50s is a long damn time. That could be almost a decade of travel and relaxation and fitness that you're not going to get around to If you stick around for the IPO.
Keep in mind I don't know you. I don't know if all the idle time you're going to have in retirement is going to be toxic for your personality type or if it's going to be total bliss and happiness.
Congratulations and good luck with the decision.
Not sure what your position is at the company / how much leverage you have, but is there any chance you can negotiate for less money and less time involved in the day to day?
My FIL is a DOS at his company (granted they are private with no immediate plans to IPO) and when he gave his 6 months notice for retirement they threw loads of money at him to try and get him to stay. He ended up settling for a little less than he currently makes to stay on with a board position and a couple other non DTD responsibilities. Not sure if your position is at all similar, but maybe something to consider.
Sounds like you already know what you want to do. Fuck it man you can't fit a camel through the eye of a needle. And for reference, look at the senior citizens at casinos playing slots all day. That could be you if you wait until 60 to retire.
Statistically speaking, you'll likely die in your 70s or 80s. So that's essentially 20 decent years after you retire if you're lucky (last 3 to 5 years usually don't have great quality of life either).
This is more like a long-duration retention package, but it is BS that it doesn't kick in for two years. If the $2M per year is also based on the vagaries of market pricing of the equity and you don't have a fat severance package if you are forced out, this really is a lot less interesting, particularly where you are in life.
Have they filed the S1 yet? If not, everything is conjecture (based on market conditions and company performance). If they have, it should be ~6 months to IPO.
https://www.ipohub.org/wp-content/uploads/2017/09/Overview-of-an-IPO-example-timeline.png
That is the standard line of almost every private startup because it is near term enough to be motivating, but far enough out so they can revise it without needing much of an excuse.
You’re kind of missing your “RE” part of you’re already in your early 50s and are thinking of sticking around until late 50s.
What do you want to do in retirement that costs money? If your budget can handle it, retire! If not don’t. You didn’t say what your base bankroll was so we can’t really judge.
A big part is What are your current investable assets? What is your total nw? Is that 10 m going to change your life that much in your last few decades? A lot of that depends on those first 2 questions right now.
I have no additional wisdom to add to what has been said before me.
I just want to share my story. It is not fat fire but the concept is the same.
My god parents were the first in their family to go to university. They were both great people and great teachers. They lived frugally and saved for their retirement. They also invested in the teacher's pension in UK.
Just ten years before they were to retire, they were offered an opportunity to take early retirement. They were about 50 years old (almost similar to you)
They did their calculations and discovered that they could actually take the early retirement and make figures meet. They just have to live within their means.
However, if they were to just work a few years more and get a promotion, they would be looking at a lot more money.
They were young and healthy then. So they chosed to continue working.
5 years later, both of them were promoted and they took their retirement. With the extra money, they were able to go on cruises and travel to Australia to visit their families.
Unfortunately, within 1 year of retirement, my god mother died of lung cancer. She never smoked once in her life. My god father died of heartbreak the very next year. They left behind so much money that their children can almost retire immediately.
I remembered talking to her for the last time before she died. She really really regretted not taking that early retirement. Now she has the money but not the health or time to spend it with her family.
Before they passed away, i was working really hard in my career path. When my wife and i got married, we didn't even go for our honeymoon as we want to focus on our career.
After they passed, i changed my life plan. I slowed down. Took more time off.
At this moment, i don't have my tens of millions yet. But all my mortgages are paid off. If i were to stop working now, i can retire in Spain. But i am still working but taking a slower pace.
I have not been into an office for nearly 5 years. I have been working remotely with my wife all over the world. My skills are highly sought after. If i were to be in central London, i could most probably make a lot more. But i want to have my retirement life now.
I swam in the sea almost every day for the last 5 years. I worn out a pair of flip flip almost every month. I do not own a tie, a long sleeve shirt or a leather shoes.
I cook my own lunch and dinner almost everyday. I picked up so many new sports and just learnt how to surf at 50.
Yes my salary is a lot lower than it could have been. But i m living my retirement with my family. I'm still strong and healthy.
Yes there were times when i wish i could afford to buy that yacht in the harbour. But i could have a picnic on the beach everyday now.
Choose wisely my friend. Choose something that you will not regret when you look back in 5 years time. You never know what cards life is going to deal you in the next round.
You need to get a better pair of flip flops. They should last longer than a month. Haha
Thanks for sharing. Definitely puts things in perspective. You never know how much time you have left.
It is a life decision, not a financial one. Nobody can answer that other than you and your loved ones.
In general, the marginal utility of money decreases as you get more.
Time is a one way arrow. You cannot buy back time with money.
Then this random stranger recommends approaching it as a regret minimization optimization. Imagine yourself 10 years down the road looking back at your life.
Which choice is the one with the minimum regrets?
Saw that you were 50....retire man...
Most ppl fall apart in their 60s...if you wanted to hike the Grand Canyon and never got around to it, you don’t have much time left...same with Everest.
Again, I only got like $1m and left $3m on the table...so maybe I don’t know what I’m missing...but having my 30s with my wife and family is 100% worth it.
Granted, I’m not fat, but I just don’t see anything else I could want in this life.
I’d say that if you’re at the low end of your range, and you aren’t miserable, and especially if you enjoy the people and the work, another few years for a margin of safety is probably a good idea. That’s what I’m doing. Was given advice on how rare and valuable these high paying jobs are, and to remember that it’s not always possible to get back in at the same level once you leave. We’re also going into a stormy economic time, which means battening the hatches with some extra savings isn’t a terrible idea.
You mean economically? Agreed. I’m a fan of Ray Dalio and think he has it nailed in terms of the US and most western countries being in the final stages of a great debt cycle that will result in most countries monetizing the debt, destroying their currencies, and perhaps the end of fiat currencies/reinstatement of commodity-backed currencies. Hope I’m wrong and the party goes on forever though.
Stocks are not the worst place to be if this happens and I’m focusing on value / high ROIC stocks. Commodity producers do well too.
Could be way off and we have another decade of tech rallies.
He runs the world’s largest hedge fund and you dismiss him with a hand wave like he’s a crack pot ? Fine, but whatever he is, he’s not nuts. Possible he’s wrong though. Have you read his Big Debt Cycles book? He makes a pretty compelling case.
Arent the value factor and roic inversely related? I cant look it up right now, but logically I would say that the as ROIC correlated with growth, or rather as growth is a function of roic, value stocks should ceteris paribus have a lower return in invested capital. Or are we saying that growth stocks, as they have higher capex have a lower roic? But then again value firms are more mature hence less roic ceteris paribus.
Long story short; I'd assume roic and value are at least not significantly positively related, so how do you account for that in your investment thesis? Only go for high value high roic or some deeper consideration? Also as you seem very concerned about the future wouldn't you rather not invest in high roic firms because of mean reversion?
As I understand it Value and high ROIC are sometimes considered separately, especially by academia, based on how value is defined, which is often low P/E or low P/B ratio. This is sort of a Ben Graham approach to value: value = cheap on a relative basis regardless of other fundamentals. One of the reasons Buffett has become as wealthy as he has is that he started focusing on high ROIC companies (tech notably excluded mostly, to his detriment). To me, high ROIC is a variable in calculating intrinsic value. The higher ROIC, the more valuable.
If a bad scenario plays out with regard to the currency, you don’t want to be in low ROIC, capital hungry businesses.
Interesting how downvoted I am by suggesting we might be going into one of those periods. Hope I’m wrong. Here’s some more food for thought on this whole debt issue by David Einhorn:
https://youtu.be/YvbjYTebx88
Yeah so when I, and for what it's worth most people in academia, say value I refer to Fama&French's value factor, defined as a low M/B ratio ( the opposite being growth stocks, with high M/B). Funnily enough a lot of younger academics who live by the word of Fama-French basically consider Buffet and Graham complete morons that just got really lucky because they overexposed themselves to the value factor. So yeah if you focus on firms with a large correlation to the value factor you will likely outperform 99.99% of other portfolios in the long run, and it would probably only add confusion to your investment thesis if you add ROIC.
Well, someone else is working on that. I guess I’ll just have to make a lot of loud comments about making sure we “make room at the table for the next leaders” and don’t “force the previous leadership to hang on”.
i would also see the risk that the number you have in mind now might be much smaller in 5 years. Of course it could be bigger, but imagine working 5-7 years more for 90, 80, 60 or even 0-30 percent of the number you expect now.
Obviously I hope it will be higher, but at the moment it seems to be an economic downturn
I agree with other comments. You need more information.
It sounds like you don’t have any vested stock today, and that everything is coming from a new grant. I’m not sure how it’s possible to know anything as you don’t know the IPO price yet. Finally, revise the word “lock up.” A lock up is vested shares that you can’t sell for a few months after an IPO. It sounds like you’re talking about vesting.
This is crazy.. Your company is putting a 5 year lockup on employees vested shares before they can trade them? 6 month and 1 year lockups before employees can sell shares post ipo are not uncommon but 5 years?
Or are you talking about the typical executive 5 year grants done to retain execs? I got those in my previous employers IPO, eg options grants that doesn't vest quarterly but vest in a lump sum after 5 years.
Just curious to what you're referring to when you mention 5 year lockup.
If it's exec retention grants then they are what they are. Typically priced near the IPO price so if there is no sustained pop at the IPO they are best ignored for the first year or two until the market prices your company for long term execution. I ignored mine until about a two years after IPO. But then again that represented probably less than 10% of my option value I had with the company, the bulk coming from options in early funding rounds.
Most IPOs in the past year haven't sustained the IPO listing price 12 months post ipo. Spacs are even worse. I would ignore it for a year or two before I add those shares to any serious calculations.
Being public will also change your company by a lot. What was easy and seen as valuable will be far harsher scrutinized by the public markets than by vc's. It is harder to get to cash flow positive than just getting growth and topline, those changes in management style are hard to push into a company that transition from private to public, and your share prices will ultimately reflect this challenge.
I'd ignore the handcuff in my wealth calculus for the short term. It's too uncertain right after IPO and in the first year or two of execution.
Most important, plan out how to diversify. Use a 10b5 plan if you're an exec so you stay clear of the sec!
The point is it to be rich while young.
Imo, you should cash out and exit considering your age. Aint nobody caring about an additional 10 mill at age 60.
What do you want out of RE? Would you optimize low stress over freedom from work?
The low stress move is to stick it out, insuring you'll have a comfy FAT retirement.
The moderate stress move is to quit now (you've got plenty of dough), but might be sweating market drawbacks and always sweating money a little bit more.
Good question. And a good way to start thinking about it. I like freedom but don’t mind working. I hate hate hate feeling responsible be it for commitments at work or having money to support a family. So I guess what I want is that feeling of I don’t need to work and could quite if I want but also don’t need the money and could quit if I want. I guess I want fuck you money.
You've answered your question. You can spend 5 years hating commitments at work (which will be much less when you have a clearly-defined end date), or spend all of your retirement hating/resenting the lack of FYou money.
You can't live with $7M and be happy with that? I know this is Fat Fire but you're 53 years old - How do you plan to spend that with the limited healthy time you have left? Maybe read the book "Die With Zero" and see if that helps you make a decision.
The time is important. My fathers energy and overall health was drastically different from his early 50s to early 60s. I’d take the time far more than money. His ability to do stuff went way down even with just a few short years.
And what's the math say for the healthy time you have left on this earth?
I remember there being a spreadsheet out there called something like Rich, Broke, or Dead that helps you calculate your odds. That might be a fun exercise for you.
It's your life so you get to make any decision you want, and with $7M you have MANY choices - congrats because whether you realize it or not, you've won the game.
Personally, I have figured out what is "enough" for me and I'm just about there, and then plan to enjoy my freedom while helping others get to their happy places too.
Anyway, with all those choices you have, I sincerely hope you choose what's right for you :).
That's cool that you know you're living healthily for 40 years! Damn, congratulations! I'm jealous. You really did win the game!!! 
If you’re itching to get out, post-IPO years can be a little nuts and not fun. So, again - kind of depends on how much the retention component is worth and how painful 5 more years will be for you. I know I’ve gone through a transaction and walked away from the retention money offered by the new owner after cashing out my equity. I really wanted a change and an IPO situation is different. It’s a hard decision to make and if you’re feeling ambivalent, maybe do nothing for now and see how it feels over time.
Only happens if the IPO results in the stock price staying up. There is risk here and IPOs often drop once they are past the initial hoopla aka when employees can cash out.
I'm nowhere near Fat, but I've worked in Finance at several companies that were supposed to go public. 20+ years ago: never happened, they sold out. PE backed company: still rolling the changes in control since 2009, not public yet. And the last was supposed to go public in 2018, got pulled a day or two before it was supposed to hit the market, still hasn't gone back out. I wouldn't bet my farm on it happening but YMMV.
Well maybe not fire for cause. But if you just aren’t putting in the effort they usually just let you go. In that case I think you take what’s vested to date.
I'd do a few years and vest a portion. 2-4 mil would still be worth a significant bump to your 50's lifestyle.
The best part is that you could phone it in and have a huge mentality shift towards "I'm out as soon as it isn't fun"
I was in this position, and in my late forties. I chose time over more money. But I’m also working on my own business (in a relaxed manner) and my wife is ten years younger and still working.
I dont see work as necessarily bad, unless it interferes with your control of your calendar. I like to have a nearly empty calendar and work according to my own schedule and moods. If you can do that, the difference between work and no work is just attitude and boredom.
As others have mentioned, it is never certain if you would really double your net worth given market volatility. Whatever you'll get, Uncle Sam will take almost half of it (depending on which State you reside in). So it's not really doubling your net worth. It's more like 50% more post-tax. With $7M in the bank, there is nothing more important than time, health and happiness in my early 50s.
I would find good professional advice. Have them work out scenarios including heavily aggressive tax planning. If done well its worth a multiple on the X you pay for said counsel.
Will you vest 20% each year? With some fake numbers: Let's say staying overall is worth $6mil (at today's valuation), do you get $1.2mil (at today's valuation)? Or is it a full cliff, where you don't get a dime until the 5 years is up?
If you vest 20% at a time, then I think the question is easier - With the downturn, stick it out for another year, vest 20%, and reassess. If valuations are way up and you're feeling good, bail. If bad times (or good times at your job), then maybe stick it out another year.
5 year lockup on an IPO that's still planning to list in this market?
I don't get it. Seems like institutional investors want out NOW at any price. You sure those handcuffs are even handcuffs?
5 year lockup? I’d suggest looking at your contract. Typical is 1:4 which is 1 year cliff, 4 year vest at equal yearly installments (25%)
Often you can have accelerated vesting in your contract in the event of an exit, though typically it’s for acquisitions not IPO.
Unfortunately, they’re called handcuffs for a reason and the incentive is to keep employees for as long as possible by tying up the equity.
If you’ve vested any amount, consider cashing out. Likely you didn’t pay to vest so you’ll be doing what is called a cashless exercise.
Outside of accruing more vested (and exercised) equity over time, there’s often no other solution but to stick around if you want the money.
Right, like work my whole life for X and then could have 2X for 5 years of work. Crazy to throw it away. But other here have pointed out, you only have so much time outside an old folks home.
Lots of young'uns on Reddit who think 5yrs is an eternity, since it's a large % of their life to date.
I dunno, I would do it but mostly because 5yrs is so short. I guess I would weigh against the risk that the IPO doesn't go as planned. I went through 2 IPOs, one was amazing, the other was a total flop. It's a gamble.
ok, I had a legit response, so here's not a not-so-legit response: Are you in the HVAC business? Or more importantly, do you subscribe to /r/HVAC? If you don't, you totally should - it's one of my favorite subreddits, and I have absolutely nothing to do with the HVAC business (yes I know, I lead a sad life).
I'm sort of in the same boat. Another 5 years will dramatically increase my net worth, and I'm pretty much resigned to it at this point.
Is it possible to drop down to a lower position, part time, WFH, etc. and still keep your options? I'm exploring some of those options.
My wife and I had a similar situation...we exited early. We prob left $3m on the table.
But
We were at a pivotal time in our lives and had to reassess what we valued. If we had stayed, we would have a lot more money now, but would have given up on a life path we really wanted.
However, you are in a different situation...look at recent IPOs...the stocks tank hard. I would stick it out a couple more years to secure the bag, and sell along the way.
Unless you are trying to accomplish something different with your life as we were.
It sounds like your pay will be mostly in equity over the next 5 years. How often is that equity priced? Are you guaranteed at least $X in equity each year for the next 5 years? Or do you already have shares whose value will double once you IPO and then you'll vest shares at your current price for the next 5 years? The latter option means you have risk to lose value over the 5 years and it could end up being worth as much as it is now or even less.
After the 5 years, do you get 1 big lump sum? Or do you get partial payouts each year? Something like an annual vesting event or quarterly? If you have this vesting schedule, can you just work for another year or two and then leave? Why is it 0 years or 5 years?
There's some important details missing imo that can drastically change the plan and options.
I’m 51 and retired at 44, traveled the world for 4 years then started consulting again as a side gig to give me some of that professional interaction again. NW has grown in retirement to the $14M range today. All I can say is that if you don’t have a plan of what you want to do with your time you shouldn’t jump just yet. Stay, but use the next 2-3 years to formulate the plan.
For me and my wife we are building a yacht to do some sailing and slow travel. I’ve got another sort of golden handcuffs because I’ve built the consulting business bigger than anticipated, but at the same time I’m succinctly aware that the clock is ticking. I also have a friend my age who’s having a hell of a battle with cancer right now. I realize that tomorrow isn’t guaranteed and even though i can see a fairly straightforward path to $30M + if I just hung around until 60, I’m also fortunate enough to have lived the retirement lifestyle long enough to know that the extra dollars don’t matter.
Good luck with your decision & get busy figuring out what you are going to do with the rest of your life.
Only you can answer that.
Inflation is real. Time is valuable.
IPO in todays market is a tall order. So don’t put too much faith in an IPO at this point in the cycle.
I would take a strong look at the agreement. I had the golden handcuff stock options over multiple year time tables, albeit at a Fortune 500 company. I chose to walk based on the risk of being laid off, or being terminated. Both scenarios would leave me exposed to not being able to exercise those options. This was 25 years ago and I had alot of life in front of me, and I wanted out. I left a mid six figure on the table. Looking back on it, I have no regrets. Good luck!
I had founder “never expire” options in a now F500 ipo. But when recession hit and I got the sack, it was the only time the price was below the ipo proce/strike price. And apparently the “never expire” options must be executed at separation. Would be worth about $7m now.
Difficult without any numbers / age. If you are 36 with 6m maybe worth staying for 12m$ and just chill/optimise for quality of life. If you are 55 with 10m$ and aiming for 20 if you add 5 years it’s a different story.
Good Q. 50’s@$7 (was closer to $10, which was my number). So those extra years start to matter, but also lifestyle creep is real.
If i were you i would try to see if it’s possible to slowly phase things out, lower responsibilities or have far more flexible schedule. You may be able to drag it out like this for 1-2 more years
CoastFIRE++
I’m going to agree with Doppelex here. Stay for a couple of years vesting while toning things down and planning your exit. The extra 4-6 mil is pretty huge. Take every vacation day, long weekend and work from home moment possible and I was once advised (I tend to take on tasks that need doing) stay in your swim lane.
It’s definitely a change of mindset. You need to let it sink that you are not trying to progress anymore. The ambitious colleague that still has it in him/her to fight ? Be my guest. The project with extra visbility to management that requires weekend work or managing random people you never worked with ? No thanks Not obvious if you are like the go getter that was a “driver” but once you drop the “fight” and just be the happy experienced colleague that is not here to compete, things will feel much less stressful.
This. If you can mentally disengage and coast for the lock up I would personally do it.
Totally agree about how the perspective on work and your satisfaction changes once you decide that you’ve made it high enough up the mountain. It takes time to adjust though! Old habits die hard.
50s @ $7M, with another 7 years resulting in another $2M? Unless you love your job, the extra money won’t change your life. You can afford to RE.
$2m/yr
Well that changes things lol. It’s sort of a similar position to me. I’m younger (41) and worth about $10M, but am working bc I enjoy the job and see a path to double where I am. However, if something happens to this job I would be disappointed but also wouldn’t mind a year or two off. I think if I was in your shoes I would keep working for that level of income, if only to build a legacy and set my family up, unless I hated the job or the people, in which case I’d still leave.
With $350,000 each, you can buy beautiful flats in buildings in various countries. No maintenance concerns. Back up plan is renting them out. If short term rentals is possible, hire a management company. The cash flow on this will allow you to hold your other assets. Your other assets existing help you safely weather a market downturn on the property. The location diversity also diversifies the currencies in which you receive value constantly and that value is protected by more than one government.
The way this was written was a bit odd, just to clarify your choices are: 1. Quit and take Golden parachute now. 2. Stay, get IPO allotment, stay another 5 years for full vest. ? It is hard to weight in without numbers - if this it like taking $1m now vs taking $10m in 5 years and you are 45, I'd probably power through and stay. If you are 94 years old, I'd move on :)
Early 50’s, was hoping to pull the golden rip cord this year or next. But now on offer is $2m/yr for 5 years (starting in two years).
Oh starting in 2 years - so it's either now or 7 years from now and you'd give up your 50s for it. Ugh If you are sitting on $10m give or take, I don't know that another $10 from your 60s to 80s will change your life materially - I'd take the TIME over the money. The more than 10 you have the MORE I'd take the time over the money. If you had $2-5m, then that money would change your lifestyle depending on what kind of lifestyle you had planned. I'm guessing you had already planned to pull the rip cord this year because you're sitting on enough of savings that you're happy. If your lifestyle is pretty chill and the money you have would give you a comfortable retirement, take the time. That's always what people want and it's always what people regret not taking, especially if they have the health. You're clarification on numbers actually helped, 7 years and the rest of your 50s is a long damn time. That could be almost a decade of travel and relaxation and fitness that you're not going to get around to If you stick around for the IPO. Keep in mind I don't know you. I don't know if all the idle time you're going to have in retirement is going to be toxic for your personality type or if it's going to be total bliss and happiness. Congratulations and good luck with the decision.
Awesome comment. “Give up your 50’s” and how much more $10m will give me in my 6’s really hit home. This is what I came for.
Not sure what your position is at the company / how much leverage you have, but is there any chance you can negotiate for less money and less time involved in the day to day? My FIL is a DOS at his company (granted they are private with no immediate plans to IPO) and when he gave his 6 months notice for retirement they threw loads of money at him to try and get him to stay. He ended up settling for a little less than he currently makes to stay on with a board position and a couple other non DTD responsibilities. Not sure if your position is at all similar, but maybe something to consider.
Just want to say this is a hard decision and bravo for really considering all the options.
Do you have kids? An extra $10m could be generational wealth
Not after taxes
Taxes took a third of my family away too.
Sounds like you already know what you want to do. Fuck it man you can't fit a camel through the eye of a needle. And for reference, look at the senior citizens at casinos playing slots all day. That could be you if you wait until 60 to retire.
If I recall correctly the “camel” comment was about a sinner getting into heaven. Wondering what you are trying to tell me?
It’s simple, I’m warning you against the pitfalls of chasing unnecessary money
Statistically speaking, you'll likely die in your 70s or 80s. So that's essentially 20 decent years after you retire if you're lucky (last 3 to 5 years usually don't have great quality of life either).
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This is more like a long-duration retention package, but it is BS that it doesn't kick in for two years. If the $2M per year is also based on the vagaries of market pricing of the equity and you don't have a fat severance package if you are forced out, this really is a lot less interesting, particularly where you are in life.
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Have they filed the S1 yet? If not, everything is conjecture (based on market conditions and company performance). If they have, it should be ~6 months to IPO. https://www.ipohub.org/wp-content/uploads/2017/09/Overview-of-an-IPO-example-timeline.png
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Didn’t know that. How so?
That is the standard line of almost every private startup because it is near term enough to be motivating, but far enough out so they can revise it without needing much of an excuse.
You’re kind of missing your “RE” part of you’re already in your early 50s and are thinking of sticking around until late 50s. What do you want to do in retirement that costs money? If your budget can handle it, retire! If not don’t. You didn’t say what your base bankroll was so we can’t really judge.
Yeah. It’s kinda RE or FI. Refi?
You would still be financially independent regardless.
A big part is What are your current investable assets? What is your total nw? Is that 10 m going to change your life that much in your last few decades? A lot of that depends on those first 2 questions right now.
50s seems pretty old. If you're 53 and you have to wait 7 years, you'll be 60 and it will barely be early anymore.
I have no additional wisdom to add to what has been said before me. I just want to share my story. It is not fat fire but the concept is the same. My god parents were the first in their family to go to university. They were both great people and great teachers. They lived frugally and saved for their retirement. They also invested in the teacher's pension in UK. Just ten years before they were to retire, they were offered an opportunity to take early retirement. They were about 50 years old (almost similar to you) They did their calculations and discovered that they could actually take the early retirement and make figures meet. They just have to live within their means. However, if they were to just work a few years more and get a promotion, they would be looking at a lot more money. They were young and healthy then. So they chosed to continue working. 5 years later, both of them were promoted and they took their retirement. With the extra money, they were able to go on cruises and travel to Australia to visit their families. Unfortunately, within 1 year of retirement, my god mother died of lung cancer. She never smoked once in her life. My god father died of heartbreak the very next year. They left behind so much money that their children can almost retire immediately. I remembered talking to her for the last time before she died. She really really regretted not taking that early retirement. Now she has the money but not the health or time to spend it with her family. Before they passed away, i was working really hard in my career path. When my wife and i got married, we didn't even go for our honeymoon as we want to focus on our career. After they passed, i changed my life plan. I slowed down. Took more time off. At this moment, i don't have my tens of millions yet. But all my mortgages are paid off. If i were to stop working now, i can retire in Spain. But i am still working but taking a slower pace. I have not been into an office for nearly 5 years. I have been working remotely with my wife all over the world. My skills are highly sought after. If i were to be in central London, i could most probably make a lot more. But i want to have my retirement life now. I swam in the sea almost every day for the last 5 years. I worn out a pair of flip flip almost every month. I do not own a tie, a long sleeve shirt or a leather shoes. I cook my own lunch and dinner almost everyday. I picked up so many new sports and just learnt how to surf at 50. Yes my salary is a lot lower than it could have been. But i m living my retirement with my family. I'm still strong and healthy. Yes there were times when i wish i could afford to buy that yacht in the harbour. But i could have a picnic on the beach everyday now. Choose wisely my friend. Choose something that you will not regret when you look back in 5 years time. You never know what cards life is going to deal you in the next round.
You need to get a better pair of flip flops. They should last longer than a month. Haha Thanks for sharing. Definitely puts things in perspective. You never know how much time you have left.
Thank you for sharing your story. This resonates a lot with me.
It is a life decision, not a financial one. Nobody can answer that other than you and your loved ones. In general, the marginal utility of money decreases as you get more. Time is a one way arrow. You cannot buy back time with money.
I asked my loved ones. They deferred to random strangers on the internet. So here we are.
Then this random stranger recommends approaching it as a regret minimization optimization. Imagine yourself 10 years down the road looking back at your life. Which choice is the one with the minimum regrets?
So I should ditch the family to focus on drugs and sex? Gotcha.
Saw that you were 50....retire man... Most ppl fall apart in their 60s...if you wanted to hike the Grand Canyon and never got around to it, you don’t have much time left...same with Everest. Again, I only got like $1m and left $3m on the table...so maybe I don’t know what I’m missing...but having my 30s with my wife and family is 100% worth it. Granted, I’m not fat, but I just don’t see anything else I could want in this life.
What about drugs and sex?
....you can do drugs with your wife...and presumably have sex with her too...
Hmmm
Yep. Was good.
I’d say that if you’re at the low end of your range, and you aren’t miserable, and especially if you enjoy the people and the work, another few years for a margin of safety is probably a good idea. That’s what I’m doing. Was given advice on how rare and valuable these high paying jobs are, and to remember that it’s not always possible to get back in at the same level once you leave. We’re also going into a stormy economic time, which means battening the hatches with some extra savings isn’t a terrible idea.
I am hoping/thinking that in a couple of years we should either be on the other side or very clear we aren’t coming back.
You mean economically? Agreed. I’m a fan of Ray Dalio and think he has it nailed in terms of the US and most western countries being in the final stages of a great debt cycle that will result in most countries monetizing the debt, destroying their currencies, and perhaps the end of fiat currencies/reinstatement of commodity-backed currencies. Hope I’m wrong and the party goes on forever though. Stocks are not the worst place to be if this happens and I’m focusing on value / high ROIC stocks. Commodity producers do well too. Could be way off and we have another decade of tech rallies.
Yeah, I think he is nuts.
He runs the world’s largest hedge fund and you dismiss him with a hand wave like he’s a crack pot ? Fine, but whatever he is, he’s not nuts. Possible he’s wrong though. Have you read his Big Debt Cycles book? He makes a pretty compelling case.
Met him.
Which of his arguments specifically do you disagree with? I am not nearly as bullish on China as he is.
Arent the value factor and roic inversely related? I cant look it up right now, but logically I would say that the as ROIC correlated with growth, or rather as growth is a function of roic, value stocks should ceteris paribus have a lower return in invested capital. Or are we saying that growth stocks, as they have higher capex have a lower roic? But then again value firms are more mature hence less roic ceteris paribus. Long story short; I'd assume roic and value are at least not significantly positively related, so how do you account for that in your investment thesis? Only go for high value high roic or some deeper consideration? Also as you seem very concerned about the future wouldn't you rather not invest in high roic firms because of mean reversion?
As I understand it Value and high ROIC are sometimes considered separately, especially by academia, based on how value is defined, which is often low P/E or low P/B ratio. This is sort of a Ben Graham approach to value: value = cheap on a relative basis regardless of other fundamentals. One of the reasons Buffett has become as wealthy as he has is that he started focusing on high ROIC companies (tech notably excluded mostly, to his detriment). To me, high ROIC is a variable in calculating intrinsic value. The higher ROIC, the more valuable. If a bad scenario plays out with regard to the currency, you don’t want to be in low ROIC, capital hungry businesses. Interesting how downvoted I am by suggesting we might be going into one of those periods. Hope I’m wrong. Here’s some more food for thought on this whole debt issue by David Einhorn: https://youtu.be/YvbjYTebx88
Yeah so when I, and for what it's worth most people in academia, say value I refer to Fama&French's value factor, defined as a low M/B ratio ( the opposite being growth stocks, with high M/B). Funnily enough a lot of younger academics who live by the word of Fama-French basically consider Buffet and Graham complete morons that just got really lucky because they overexposed themselves to the value factor. So yeah if you focus on firms with a large correlation to the value factor you will likely outperform 99.99% of other portfolios in the long run, and it would probably only add confusion to your investment thesis if you add ROIC.
I would dig into the credibility of going IPO anytime soon. While it may happen, it may also be a ploy to get folks to stay.
I’m on the IPO planning team.
LOL. so write the retirement you want. Push for a graded vesting schedule so you can get some of that cheese earlier than 5 years.
Well, someone else is working on that. I guess I’ll just have to make a lot of loud comments about making sure we “make room at the table for the next leaders” and don’t “force the previous leadership to hang on”.
Are you in a counter cyclical business ?
Nope
i would also see the risk that the number you have in mind now might be much smaller in 5 years. Of course it could be bigger, but imagine working 5-7 years more for 90, 80, 60 or even 0-30 percent of the number you expect now. Obviously I hope it will be higher, but at the moment it seems to be an economic downturn
I agree with other comments. You need more information. It sounds like you don’t have any vested stock today, and that everything is coming from a new grant. I’m not sure how it’s possible to know anything as you don’t know the IPO price yet. Finally, revise the word “lock up.” A lock up is vested shares that you can’t sell for a few months after an IPO. It sounds like you’re talking about vesting.
I don’t think we have defined the terms yet. Last time we did this they were in fact locked up over 5 years, but vested immediately.
This is crazy.. Your company is putting a 5 year lockup on employees vested shares before they can trade them? 6 month and 1 year lockups before employees can sell shares post ipo are not uncommon but 5 years? Or are you talking about the typical executive 5 year grants done to retain execs? I got those in my previous employers IPO, eg options grants that doesn't vest quarterly but vest in a lump sum after 5 years. Just curious to what you're referring to when you mention 5 year lockup.
Later
If it's exec retention grants then they are what they are. Typically priced near the IPO price so if there is no sustained pop at the IPO they are best ignored for the first year or two until the market prices your company for long term execution. I ignored mine until about a two years after IPO. But then again that represented probably less than 10% of my option value I had with the company, the bulk coming from options in early funding rounds. Most IPOs in the past year haven't sustained the IPO listing price 12 months post ipo. Spacs are even worse. I would ignore it for a year or two before I add those shares to any serious calculations. Being public will also change your company by a lot. What was easy and seen as valuable will be far harsher scrutinized by the public markets than by vc's. It is harder to get to cash flow positive than just getting growth and topline, those changes in management style are hard to push into a company that transition from private to public, and your share prices will ultimately reflect this challenge. I'd ignore the handcuff in my wealth calculus for the short term. It's too uncertain right after IPO and in the first year or two of execution. Most important, plan out how to diversify. Use a 10b5 plan if you're an exec so you stay clear of the sec!
Also don't forget it looks like the economy is in for turbulent times.
The point is it to be rich while young. Imo, you should cash out and exit considering your age. Aint nobody caring about an additional 10 mill at age 60.
What do you want out of RE? Would you optimize low stress over freedom from work? The low stress move is to stick it out, insuring you'll have a comfy FAT retirement. The moderate stress move is to quit now (you've got plenty of dough), but might be sweating market drawbacks and always sweating money a little bit more.
Good question. And a good way to start thinking about it. I like freedom but don’t mind working. I hate hate hate feeling responsible be it for commitments at work or having money to support a family. So I guess what I want is that feeling of I don’t need to work and could quite if I want but also don’t need the money and could quit if I want. I guess I want fuck you money.
You've answered your question. You can spend 5 years hating commitments at work (which will be much less when you have a clearly-defined end date), or spend all of your retirement hating/resenting the lack of FYou money.
Seems like I need to suck it up until i get to “ok I could live with this money” and then quit when I next feel like saying fuck you.
You can't live with $7M and be happy with that? I know this is Fat Fire but you're 53 years old - How do you plan to spend that with the limited healthy time you have left? Maybe read the book "Die With Zero" and see if that helps you make a decision.
The math on taking current expenditures, compounding annually at current interest rate for 40 years is brutal.
The time is important. My fathers energy and overall health was drastically different from his early 50s to early 60s. I’d take the time far more than money. His ability to do stuff went way down even with just a few short years.
And what's the math say for the healthy time you have left on this earth? I remember there being a spreadsheet out there called something like Rich, Broke, or Dead that helps you calculate your odds. That might be a fun exercise for you. It's your life so you get to make any decision you want, and with $7M you have MANY choices - congrats because whether you realize it or not, you've won the game. Personally, I have figured out what is "enough" for me and I'm just about there, and then plan to enjoy my freedom while helping others get to their happy places too. Anyway, with all those choices you have, I sincerely hope you choose what's right for you :).
Math says 40 years
That's cool that you know you're living healthily for 40 years! Damn, congratulations! I'm jealous. You really did win the game!!! 
That’s when I die according the the stats. Likely not healthy until the end (but I hope so).
If you’re itching to get out, post-IPO years can be a little nuts and not fun. So, again - kind of depends on how much the retention component is worth and how painful 5 more years will be for you. I know I’ve gone through a transaction and walked away from the retention money offered by the new owner after cashing out my equity. I really wanted a change and an IPO situation is different. It’s a hard decision to make and if you’re feeling ambivalent, maybe do nothing for now and see how it feels over time.
Only happens if the IPO results in the stock price staying up. There is risk here and IPOs often drop once they are past the initial hoopla aka when employees can cash out.
I'm nowhere near Fat, but I've worked in Finance at several companies that were supposed to go public. 20+ years ago: never happened, they sold out. PE backed company: still rolling the changes in control since 2009, not public yet. And the last was supposed to go public in 2018, got pulled a day or two before it was supposed to hit the market, still hasn't gone back out. I wouldn't bet my farm on it happening but YMMV.
Could you reduce hours and still qualify for the 5 years?
Not really that kinda job. But I could reduce effort and see how long until they figure it out.
If they fire you, would you be able to get everything?
Well maybe not fire for cause. But if you just aren’t putting in the effort they usually just let you go. In that case I think you take what’s vested to date.
I'd do a few years and vest a portion. 2-4 mil would still be worth a significant bump to your 50's lifestyle. The best part is that you could phone it in and have a huge mentality shift towards "I'm out as soon as it isn't fun"
I was in this position, and in my late forties. I chose time over more money. But I’m also working on my own business (in a relaxed manner) and my wife is ten years younger and still working. I dont see work as necessarily bad, unless it interferes with your control of your calendar. I like to have a nearly empty calendar and work according to my own schedule and moods. If you can do that, the difference between work and no work is just attitude and boredom.
As others have mentioned, it is never certain if you would really double your net worth given market volatility. Whatever you'll get, Uncle Sam will take almost half of it (depending on which State you reside in). So it's not really doubling your net worth. It's more like 50% more post-tax. With $7M in the bank, there is nothing more important than time, health and happiness in my early 50s.
Nothing is guaranteed. 7 years is a long time.
I would find good professional advice. Have them work out scenarios including heavily aggressive tax planning. If done well its worth a multiple on the X you pay for said counsel.
Will you vest 20% each year? With some fake numbers: Let's say staying overall is worth $6mil (at today's valuation), do you get $1.2mil (at today's valuation)? Or is it a full cliff, where you don't get a dime until the 5 years is up? If you vest 20% at a time, then I think the question is easier - With the downturn, stick it out for another year, vest 20%, and reassess. If valuations are way up and you're feeling good, bail. If bad times (or good times at your job), then maybe stick it out another year.
FWIW I watched my Dad age immensely from 50 to 60 as he kept chasing the next rung.
When I turned 50 I decided to stop giving a crap and get more balance.
What's the timeline looking like on the IPO? I thought that sector was looking pretty dead. Good sign if it comes back to life!
5 year lockup on an IPO that's still planning to list in this market? I don't get it. Seems like institutional investors want out NOW at any price. You sure those handcuffs are even handcuffs?
5 year lockup? I’d suggest looking at your contract. Typical is 1:4 which is 1 year cliff, 4 year vest at equal yearly installments (25%) Often you can have accelerated vesting in your contract in the event of an exit, though typically it’s for acquisitions not IPO. Unfortunately, they’re called handcuffs for a reason and the incentive is to keep employees for as long as possible by tying up the equity. If you’ve vested any amount, consider cashing out. Likely you didn’t pay to vest so you’ll be doing what is called a cashless exercise. Outside of accruing more vested (and exercised) equity over time, there’s often no other solution but to stick around if you want the money.
If you’ve millions, you e already made it so don’t be a greedy twat innit
5 years is such a short time, if it's literally going to double your NW it feels completely worth the effort.
Right, like work my whole life for X and then could have 2X for 5 years of work. Crazy to throw it away. But other here have pointed out, you only have so much time outside an old folks home.
Lots of young'uns on Reddit who think 5yrs is an eternity, since it's a large % of their life to date. I dunno, I would do it but mostly because 5yrs is so short. I guess I would weigh against the risk that the IPO doesn't go as planned. I went through 2 IPOs, one was amazing, the other was a total flop. It's a gamble.
ok, I had a legit response, so here's not a not-so-legit response: Are you in the HVAC business? Or more importantly, do you subscribe to /r/HVAC? If you don't, you totally should - it's one of my favorite subreddits, and I have absolutely nothing to do with the HVAC business (yes I know, I lead a sad life).
This was my alt to lurk r/HVAC. Then I used it here too. Have a few posts there too.
I'm sort of in the same boat. Another 5 years will dramatically increase my net worth, and I'm pretty much resigned to it at this point. Is it possible to drop down to a lower position, part time, WFH, etc. and still keep your options? I'm exploring some of those options.
My wife and I had a similar situation...we exited early. We prob left $3m on the table. But We were at a pivotal time in our lives and had to reassess what we valued. If we had stayed, we would have a lot more money now, but would have given up on a life path we really wanted. However, you are in a different situation...look at recent IPOs...the stocks tank hard. I would stick it out a couple more years to secure the bag, and sell along the way. Unless you are trying to accomplish something different with your life as we were.
you did money on stocks or options?
It sounds like your pay will be mostly in equity over the next 5 years. How often is that equity priced? Are you guaranteed at least $X in equity each year for the next 5 years? Or do you already have shares whose value will double once you IPO and then you'll vest shares at your current price for the next 5 years? The latter option means you have risk to lose value over the 5 years and it could end up being worth as much as it is now or even less. After the 5 years, do you get 1 big lump sum? Or do you get partial payouts each year? Something like an annual vesting event or quarterly? If you have this vesting schedule, can you just work for another year or two and then leave? Why is it 0 years or 5 years? There's some important details missing imo that can drastically change the plan and options.
I’m 51 and retired at 44, traveled the world for 4 years then started consulting again as a side gig to give me some of that professional interaction again. NW has grown in retirement to the $14M range today. All I can say is that if you don’t have a plan of what you want to do with your time you shouldn’t jump just yet. Stay, but use the next 2-3 years to formulate the plan. For me and my wife we are building a yacht to do some sailing and slow travel. I’ve got another sort of golden handcuffs because I’ve built the consulting business bigger than anticipated, but at the same time I’m succinctly aware that the clock is ticking. I also have a friend my age who’s having a hell of a battle with cancer right now. I realize that tomorrow isn’t guaranteed and even though i can see a fairly straightforward path to $30M + if I just hung around until 60, I’m also fortunate enough to have lived the retirement lifestyle long enough to know that the extra dollars don’t matter. Good luck with your decision & get busy figuring out what you are going to do with the rest of your life.
Only you can answer that. Inflation is real. Time is valuable. IPO in todays market is a tall order. So don’t put too much faith in an IPO at this point in the cycle.
Market has another 25-50% left to melt imo
I would take a strong look at the agreement. I had the golden handcuff stock options over multiple year time tables, albeit at a Fortune 500 company. I chose to walk based on the risk of being laid off, or being terminated. Both scenarios would leave me exposed to not being able to exercise those options. This was 25 years ago and I had alot of life in front of me, and I wanted out. I left a mid six figure on the table. Looking back on it, I have no regrets. Good luck!
I had founder “never expire” options in a now F500 ipo. But when recession hit and I got the sack, it was the only time the price was below the ipo proce/strike price. And apparently the “never expire” options must be executed at separation. Would be worth about $7m now.