SpaceX Alumni: 7 Financial Decisions to Make After Leaving the Company

1. Understand What Happens to Your SpaceX Stock Options

If you received stock options as part of your compensation at SpaceX, one of your first priorities should be understanding what happens to those options when you leave.

While you were employed, your options likely followed a vesting schedule that allowed you to earn the right to purchase shares over time. Once your employment ends, however, the rules can change.

Depending on your equity agreement, you may have a limited window to exercise vested options. A 90-day post-termination exercise period is common with some stock option grants, although your actual deadline depends on your plan and grant terms.

Before leaving, make sure you understand how many options you have, how many are vested, your exercise price, and when those options expire.

You’ll also want to know how much cash you would need to exercise them.

For example, if you have 10,000 vested options with a $20 strike price, exercising all of them would require $200,000 before accounting for any potential taxes.

That’s a significant financial commitment, especially during a career transition.

The earlier you understand your options and deadlines, the more time you’ll have to evaluate your choices rather than making a rushed decision.

2. Consider the Tax Implications Before Exercising Your Options

The cost of exercising your SpaceX stock options is only part of the equation. You also need to understand the potential tax consequences.

The tax treatment depends on the type of options you hold.

Incentive Stock Options (ISOs) can offer favorable tax treatment under certain circumstances, but exercising them may create an Alternative Minimum Tax (AMT) liability. That can happen even if you haven’t sold any shares or received cash from the transaction.

Non-Qualified Stock Options (NSOs) generally create ordinary compensation income when exercised, based on the difference between the exercise price and the fair market value of the shares.

There’s also an important timing consideration. ISOs generally must be exercised within three months after employment ends to retain their ISO tax treatment, subject to applicable rules and exceptions. Your equity agreement determines how long the options themselves remain exercisable.

Because SpaceX is privately held, you may not have an immediate opportunity to sell shares to cover your exercise costs or tax obligations.

That means you could be committing substantial cash to an asset you may need to hold for an extended period.

Before exercising, work with your financial advisor and tax professional to estimate the potential tax impact and understand how the decision affects your overall financial situation.

3. Decide How SpaceX Equity Fits Into Your Investment Portfolio

When you work for a company like SpaceX, it’s natural for a meaningful portion of your financial life to become connected to its success.

Your income comes from the company, and over time, your stock options or shares may grow into one of your largest assets.

But once you leave, it’s worth looking at that concentration from a different perspective.

Consider someone with a $3 million net worth, including $2 million in SpaceX equity. Roughly two-thirds of that person’s wealth is tied to a single privately held company.

That’s an example of concentrated stock risk, where a substantial portion of your financial future depends on the performance of one investment.

It doesn’t necessarily mean you need to sell your shares. But you should understand how much of your net worth is connected to SpaceX and whether you’re comfortable with that exposure.

SpaceX’s private-company status adds another consideration. Unlike publicly traded stocks, SpaceX shares generally cannot be sold whenever you choose. Liquidity may depend on company-approved transactions or other permitted opportunities.

If you have significant SpaceX equity, developing a strategy for managing that concentration can help you prepare for future liquidity opportunities while keeping your broader investment goals in mind.

4. Make a Plan for Your Old 401(k)

Your SpaceX stock options may be getting most of your attention, but don’t forget about the retirement savings you’ve built while working there.

If you’ve been contributing to a SpaceX 401(k), you’ll need to decide what to do with that money after you leave. You may be able to keep it in the existing plan, roll it into a new employer’s 401(k), or move it into an Individual Retirement Account (IRA).

There’s no single right answer. It depends on what makes the most sense for your financial situation.

For example, if your new employer offers a 401(k) with good investment options and low fees, combining your accounts might make things easier to manage. On the other hand, an IRA may give you more investment choices and greater control over how your retirement savings are invested.

You’ll also want to compare fees, consider the tax implications, and understand any differences in account protections before making a move.

If you decide to transfer the money, make sure you understand how the rollover works. A direct rollover is generally the simplest way to avoid unexpected taxes or penalties.

You don’t have to rush into a decision, but it’s worth reviewing your options rather than leaving your retirement savings with a former employer simply because that’s where they’ve always been.

5. Review Your Cash Flow and Available Liquidity

Even if you’re moving directly into another job, your financial situation may look different after leaving SpaceX.

Your new compensation package could include a different combination of salary, bonuses, equity, and benefits. If you’re starting a business, retiring early, or taking an extended break, the changes could be even more significant.

Before making major financial commitments, take a close look at your available cash and ongoing expenses.

How long could your existing resources comfortably support your lifestyle? Do you have enough liquidity to cover unexpected expenses or a potential tax bill?

These questions become particularly important if you’re considering exercising SpaceX stock options.

You might have substantial wealth on paper without having access to the cash needed for everyday expenses or other financial obligations.

For example, someone with $1.5 million in SpaceX equity and $100,000 in available cash faces different decisions than someone with the same net worth but a larger portion held in liquid investments.

Understanding that distinction can help you avoid putting unnecessary pressure on your finances or making decisions about your SpaceX equity simply because you need cash.

6. Replace the Financial Benefits You’re Leaving Behind

Health insurance is usually one of the first things people think about when leaving an employer, and for good reason.

You’ll want to understand when your existing coverage ends and whether you’ll transition to a new employer’s plan, elect COBRA continuation coverage, or obtain insurance elsewhere.

But health insurance isn’t the only benefit worth reviewing.

Depending on your benefits package, you may also be leaving behind employer-provided life insurance, disability insurance, retirement contributions, and other financial protections.

These benefits can be easy to overlook because they’re often handled automatically while you’re employed.

For example, if your family relies on employer-sponsored life insurance, losing that coverage could leave a gap in your financial protection. The same is true for disability insurance, particularly if your household depends heavily on your income.

A job change is a good opportunity to review your coverage, evaluate your retirement contributions, and make sure your financial protections still align with your needs.

7. Build a Financial Plan Around What Comes Next

Leaving SpaceX isn’t just about closing out your financial relationship with a former employer. It’s also an opportunity to consider what you want the next phase of your financial life to look like.

Maybe you’re moving into another high-paying position. Perhaps you’re launching a business, spending more time with your family, or beginning to think seriously about retirement.

Those goals should influence how you approach your SpaceX equity and other financial decisions.

Someone planning to retire within five years may need a different investment and liquidity strategy than someone who expects to continue working for another 20.

Likewise, someone starting a business may need to prioritize available cash, while someone with a stable new income may have more flexibility.

The key is to avoid treating each decision separately.

Your stock option strategy can affect your taxes and cash reserves. Your SpaceX holdings influence your overall investment risk. And your retirement accounts, insurance coverage, and income should all support your long-term goals.

Looking at the entire picture can help you make decisions based on where you want to go, not simply what needs attention today.

Planning Your Financial Future After SpaceX

Your SpaceX equity may be one of the most valuable assets you’ve accumulated during your career. Understanding how to manage it after leaving the company can have a lasting impact on your financial future.

At Babin Wealth Management, we work with current and former SpaceX employees to help them understand their equity compensation, evaluate important financial decisions, and build strategies around their long-term goals.

If you’ve recently left SpaceX or you’re planning your departure, schedule a free 30-minute Explore meeting to discuss your equity and the financial decisions ahead