Should an ESOP Be Your Only Retirement Account?

When it comes to saving for retirement, diversification is critical. Consider building your nest egg with a combination of accounts in addition to an ESOP.

A clear jar of coins with a sprout coming out the top sits on green grass.
(Image credit: Getty Images)

Editor’s note: This is part four of a six-part series in which Peter Newman, CFA, of Peak Wealth Planning, explains the benefits of employee ownership for the U.S. workforce. There are more than 6,500 Employee Stock Ownership Plans, or ESOPs, in the U.S. covering almost 14 million employees. Part one is Five Key Advantages to Working at an Employee-Owned Company. Part two is How Does an Employee Stock Ownership Plan, or ESOP, Work? Part three is Five Things Employee Owners Need to Know About Their ESOP.

Employee stock ownership plans (ESOPs) empower employees by providing them with a company-funded account for retirement. While businesses steered by their employees often exhibit remarkable management, they, like any other enterprises, may occasionally face challenging periods or even extreme situations like bankruptcy. Kodak, Piggly Wiggly and most recently in 2023, Silicon Valley Bank, are examples that underline the importance of resilience and adaptability.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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Peter Newman, CFA
President, Peak Wealth Planning, LLC

Peter Newman founded Peak Wealth Planning, LLC in 2014 to provide financial planning and investment management for individuals who built their wealth through ESOP participation, business ownership or real estate investing. He helps families diversify their concentrated stock, reduce estate taxes, preserve wealth and generate stable retirement income. Peter holds the Chartered Financial Analyst designation, considered by many to be the gold standard for investment management.