Common Retirement Mistakes for Google Employees to Avoid
Making the most of your Google employee benefits is key to preparing for retirement. Unfortunately, financial planning is nothing if not complicated. It's easy to make mistakes.
At TrueWealth Financial Partners, we're very familiar with the unique advantages and pitfalls Google employees face. To help you get more bang for your buck, here are the most common mistakes to avoid.
1. Not Maximizing Your 401(k) Employer Match
Google offers one of the best 401(k) matches in the tech industry: 50% of all employee contributions up to the IRS limit. For 2026, that means if you contribute the full $24,500, Google adds an extra $12,250 with no strings attached. That's an immediate 50% return on your investment even before factoring in any further growth.
Despite this, many employees don't capture the full match. Some contribute too little, missing out on the potential savings available. To get the full match, calculate the exact percentage you need per paycheck to reach $24,500 by year-end, set it in Vanguard, and review quarterly to make sure you’re on track.
2. Accumulating Too Much Google Stock
Many Google employees have 70%, 80%, or even 90% of their net worth in Google stock. Google has been a great performer, and it's tempting to hold onto all your Google Stock Units (GSUs) as they vest. However, letting your Google stocks pile up creates concentration risk.
Holding too much stock in one company means your job, health insurance, and wealth are all tied to that company's performance. If Google hits a rough patch, everything suffers at once. It’s usually best to let any single stock rise above 20% of your total portfolio. As you exceed that threshold, sell your GSUs and use the proceeds to diversify your investments, max out your 401(k), or fund mega backdoor Roth contributions.
3. Ignoring the Mega Backdoor Roth Strategy
The IRS sets limits on 401(k) contributions, but Google's plan allows after-tax contributions beyond those limits. Here's how it works:
After maxing out your $24,500 contribution and Google's $12,250 match, you can contribute up to $35,250 more in after-tax dollars.
These after-tax funds can be automatically converted to Roth, creating tax-free growth for retirement.
Unlike a standard Roth IRA, the mega backdoor Roth is not subject to income limits, so even high-earning Google employees can reap the benefits of a Roth savings account.
This is known as the mega backdoor Roth. Many workers either don't know about this strategy or don't use it, leaving tens of thousands in potential tax-free savings on the table.
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4. Leaving Your 401(k) in the Default Investment
When you join Google, you're automatically enrolled in the 401(k) at 10% of your salary, with investments going into a target-date fund based on when you'll turn 65. This default isn't terrible, but it's not the best option for everyone.
The default target-date fund might not match your actual retirement timeline, risk tolerance, or other investments you own. If you're planning to retire early, it might be too conservative. If you have 20+ years until retirement, you might want more equity exposure. Google offers over 30 investment options, which is more than enough to fine-tune your approach.
If you’re not sure exactly how to build your portfolio, a fiduciary financial advisor can help you make the right choices to reach your goals.
5. Poor Tax Planning with GSU Sales
Every time your GSUs vest, Google withholds 22% for federal taxes (or 37% for amounts over $1 million). For many employees in higher tax brackets, this isn't enough. If you're in the 32%, 35%, or 37% bracket, you'll owe more at tax time.
Additionally, if you hold vested shares and sell them later, you'll face capital gains taxes on any appreciation. Many Google employees face surprise tax bills of $10,000, $20,000, or more in April. To avoid this, increase your withholding percentage through your broker portal, make quarterly estimated tax payments, or sell shares immediately upon vesting to eliminate capital gains tax.
6. Not Having a Withdrawal Strategy
Contributing to your 401(k) for 20 or 30 years is the first step, but many employees overlook the second step: figuring out how to actually withdraw that money in retirement. Withdraw too much too early, and you'll run out of money. Withdraw inefficiently from a tax perspective, and you'll pay thousands more than necessary.
When planning for retirement, it’s never too early to start thinking about a withdrawal strategy. Consider tax diversification across pre-tax, Roth, and taxable accounts. Plan for Roth conversions in low-income years. For traditional (pre-tax) accounts, plan ahead for required minimum distributions (RMDs) that start at age 73 or 75.
7. Forgetting to Update Your Beneficiaries
Your 401(k) beneficiaries will receive your retirement savings when you pass away. Your beneficiary elections will override your will, so you’ll want to make sure it’s up to date. If you listed an ex-spouse or college roommate years ago and never updated it, that's who gets your money, even if you're now married with kids.
Review your beneficiary designations every year or after any major life change: marriage, divorce, birth of a child, death of a beneficiary, or significant changes in family relationships. Log into Vanguard and verify that both primary and contingent beneficiaries are current and percentages add up to 100%.
8. Cashing Out Your 401(k) When Leaving Google
When you leave Google, you have several options for your 401(k): leave it at Vanguard, roll it to a new employer's plan, roll it to an IRA, or cash it out. That last option is almost always a mistake.
If you cash out all at once, you'll pay ordinary income tax on the full amount. If you withdraw it before age 55, you’ll pay a 10% early withdrawal penalty as well. Even without that penalty, the taxes alone can cost you thousands in unnecessary taxes. Unless you're facing a true financial emergency, leave your savings in the Google 401(k) or roll it into an IRA. That way, it can continue to grow for years to come, ready for tax-efficient withdrawals when you need them.
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9. Underusing Your Health Savings Account (HSA)
If you're enrolled in Google's high-deductible health plan (gHIP), you have access to a health savings account (HSA). Google even contributes $1,000 annually to your HSA. However, many employees either don't use it or treat it only as a way to pay current medical expenses.
HSAs offer triple tax benefits: tax-deductible contributions, tax-free growth, and tax-free withdrawals for medical expenses. This makes them potentially more valuable than even a Roth IRA. For 2026, you can contribute up to $4,400 (individual) or $8,750 (family), plus an extra $1,000 if you're 55+. If you can afford it, max out your HSA, pay current medical costs out-of-pocket, invest the balance in index funds, and let it grow for retirement healthcare expenses.
10. Overlooking Healthcare Costs in Retirement
Healthcare costs are often among the highest expenses during retirement. Many employees underestimate what they'll spend on medical care, which may include insurance premiums, out-of-pocket expenses, and potentially long-term care.
While Medicare will cover some costs starting at age 65, it doesn't cover everything. Plan ahead by maximizing your HSA contributions now, researching supplemental Medicare insurance options, and considering long-term care insurance to protect your savings from unexpected healthcare costs.
11. Ignoring Required Minimum Distributions (RMDs)
At age 73, the IRS requires you to start taking RMDs from your traditional 401(k). If you have $1 million in your account, your first RMD will be around $37,000. Combined with Social Security or other income, this can push you into higher tax brackets and trigger Medicare premium surcharges.
To minimize the damage, start planning for RMDs in your 50s and 60s, not your 70s. Consider Roth conversions during low-income years after retirement but before RMDs begin. Strategic withdrawals in your early retirement years can reduce the balance subject to RMDs later, saving you thousands in the long run.
12. Trying to Do It All Alone
Retirement planning at Google is more complex than at most companies. Between the generous 401(k) match, valuable equity compensation, mega backdoor Roth opportunities, and multiple tax considerations, there's a lot to juggle.
A fiduciary financial advisor who specializes in Google benefits can help you navigate these complexities, avoid costly mistakes, and maximize your retirement savings. Your advisor can help you understand your benefits, create a diversified portfolio, optimize taxes, and adjust your plan as your needs change.
Let TrueWealth Guide You to a Better Retirement
At TrueWealth Financial Partners, we specialize in guiding you through the complexities of retirement planning. Our team is dedicated to providing personalized financial advice that caters to your unique needs and goals.
Schedule a free introductory call and let us help you navigate your retirement journey with confidence and peace of mind.
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FAQs
What happens to my 401(k) if I leave Google?
Your balance is yours to keep. You can leave it at Vanguard (if over $7,000), roll it to a new employer's plan, roll it to an IRA, or cash it out (not recommended).
Do I pay taxes on GSUs when they vest, even if I don't sell?
Yes. GSUs are taxed as ordinary income when they vest, regardless of whether you sell. Google withholds 22%, but you may owe more depending on your tax bracket.
Can I contribute to both a 401(k) and an IRA?
Yes, but if you're covered by Google's 401(k) and earn above certain thresholds, your traditional IRA contribution may not be tax-deductible.
What's the earliest I can withdraw from my 401(k) without penalty?
In most cases, it would be age 59½. However, the rule of 55 allows penalty-free withdrawals if you leave Google the year you turn 55 or later.
How much should I have saved by the time I retire from Google?
A common rule is 10x your annual salary. For example, if you make $200,000 and retire at 65, this would mean aiming for around $2 million. However, your specific target depends on your lifestyle and other income sources.