Accenture MD: How to retire in ten years

“Retire” is a word that may not resonate with many high-achieving Accenture MDs. I try not even to use the word retire when working with clients. Instead, I focus on financial independence.

It’s a subtle difference, but retirement often brings visions of sitting on the front porch and just killing time.

On the other hand, financial independence leaves open a world of possibilities from starting a new company, moving to a non-profit, or even traveling the world for a few years before figuring out what’s next.

My wife and I pursued the financial independence route when we “retired” from corporate life in 2016. My time at Accenture was rewarding, and managing a global team at Hewlett Packard was challenging and very enlightening.

However, we had other ideas on how we wanted to live our life. We knew we wouldn’t stay retired starting in our 30s, but we wanted a reset that brought us closer to each other and our values.

Imagine the possibilities

When you calculate the possibilities with total compensation, most Accenture MDs can reach financial independence (FI) after ten years in the role.

Honestly, that’s even a fairly conservative view, as I’ve worked with some Accenture clients who could reach FI in as little as five years, but they’re single and keep their expenses low.

Let’s go through some assumptions and then walk through an example of how this looks.

The Typical Accenture Managing Director

While it used to be possible to make Accenture MD in 12 years, it’s more common now to see MDs spend closer to fifteen years in roles leading up to their big promotion.

Most MDs will have worked up the career ladder at Accenture or other companies before making MD in their late-30s to mid-40s.

If they were decent savers and investors in their company retirement plans, they should have somewhere in the $300k – $400k range in their 401(k)s or other IRAs.

Additionally, many will have company stock from the ESPP or other investment activities.

We’ll keep this amount lower as these early stock grants are often used for debt repayment, home purchases, and managing through the MD cash flow issue.

Determine your safe withdrawal rate

The key to success in financial independence and early retirement is staying within your spending limits and optimizing your asset allocation.

We won’t cover the asset allocation in this post, but I want to touch on the safe withdrawal rate (SWR). You might have heard this term before, but let’s apply it to our examples below.

The SWR term has been around since the mid-1990s when Bill Bengen, an investment advisor who went to MIT, sought to understand a safe percentage of money to remove from portfolios without running out of money.

You can read his seminal article here, but his conclusion was 4% is a safe withdrawal amount.

If you’re going for early retirement with a 50+ year window, the “safer” SWR comes down to around 3.5% of assets, but we’ll use 4% in our examples.

With the 4% rule and a $1M portfolio, you could pull out $40k per year. If it were a $3M portfolio, you’d have $120,000 per year to spend. These amounts don’t account for social security or other income.

Let’s go through two examples and then talk about the SWR for financial independence.

Scenario 1: Sally, the adventurer

Sally is “homegrown,” meaning she started with Accenture out of college in 2004. She made Managing Director in 2018, an impressive fourteen-year run to the top.

In her previous fourteen years, she amassed $300,000 in her Accenture 401(k) and has saved an additional $100,000 in after-tax brokerage accounts, including her ESPP.

Sally lives in Kansas City, MO, and enjoys a low cost of living, spending $8,000 per month or $96,000 per year of her $290,000 salary. She maxes her VEIP at 30%.

Let’s plug in the numbers to look at her five and ten-year projections.

The table is just the dashboard results, but our model includes taxes and expenses, so it’s a pretty accurate view.

In five years (2026), Sally will have over $2.1 Million worth of investments, including her Accenture stock and 401(k), assuming an 8% investment return over the period.

In ten years (2031), Sally will have amassed almost $5 Million in investments! Both of these projections assume a 5% growth in expenses each year.

Now we can determine her safe withdrawal rate based on each scenario:

• 2026 retirement: $2.1 Million, SWR of $84,000 per year
• 2031 retirement: $4.9 Million, SWR of $196,000 per year

Even the 2026 scenario nearly covers her current expenses, but the 2031 retirement more than doubles it!

There are many other factors to determine if she has reached financial independence, such as family plans and career plans after Accenture, but this gives you an idea of the possibilities.

Scenario 2: Stan, the family man

Stan, the family man, had a 20-year career at another big tech firm before Accenture as a Managing Director. He received a nice bonus and equity award when he joined, but he didn’t receive a new MD grant.

Stan amassed $800,000 in his previous employer 401(k) along with $600,000 in other investments.

However, Stan also has four kids and a fancy lifestyle. Their family budget, which includes paying for college the next ten years, is $20,000 per month or $240,000 per year.

Stan joined Accenture as a Level 3 Managing Director with an income starting at $350,000 per year. Let’s look at the dashboard results:

Even with spending $240,000 per year, Stan still has a good chance of reaching financial independence at year 10. However, his prospects aren’t so good at year five.

2026 retirement: $2.8 Million, SWR of $112,000 per year
2031 retirement: $5.9 Million, SWR of $236,000 per year

Now, if their college expenses end at some point and spending goes down to $10,000 per month, they’d be closer to making it work in five years. Also, if Stan takes an encore career making less money, they’ll still be in great shape.

Complications of early retirements

We didn’t cover a lot of issues in this simplified model. Here’s a quick rundown of some of the problems and why you should work with a financial professional to ensure everything is covered.

1. Asset location optimization

Asset location optimization is a fancy way of saying it’s crucial to strategically allocate your investments across different account types.

For example, if all of the money is in a qualified (tax-deferred) account, it’s harder to access funds before age 60 without penalty, and you’ll pay taxes on it.

Most Accenture MDs will have a large amount of money in Accenture stock due to the VEIP and MD equity holding requirements, after-tax, which could mean major tax implications to selling.

Additionally, if you’re able to tax advantage of Roth IRA rollovers, you can make some positive impacts reducing taxes.

If you start planning these moves early in your career and before you close in on financial independence, it will be much more valuable over the long run.

2. Tax planning

Oh yes, and the taxes. Tax planning is probably the most important area to get in line if you want to pursue financial independence. Even if you’re not pursuing FI, this should be a major focus area.

You might think you’re covered because you work with a CPA, but unless they’re spending time focusing on tax planning, you probably have lots of “opportunities” to improve.

If you work with a financial planner or investment manager, the same applies, you should spend a lot of time discussing tax planning.

Your FI planning should optimize your tax situation by using the optimal withdrawals from the correct accounts.

For example, you can pay 0% long term capital gains if you stay under a certain income level. Imagine what this means with your Accenture stock that you purchased at $50/share.

I could go on all day about tax planning, but I don’t want to bore you anymore! Just know this is one of the most significant opportunity areas to optimize.

3. Health care planning

Before the American Healthcare Act, financial independence with early retirement was challenging because health care wasn’t readily available.

Now that anyone can buy it on the marketplace, it’s just another budget and planning step.

Even better for Accenture retirees, there’s an option to continue in Accenture’s retiree health care plan, which is the same as the High-Deductible Health Plan (HDHP) you have now.

MD, or “Accenture leader,” eligibility starts at age 50 if you’ve had at least ten years of service. For non-leaders, eligibility begins at age 55 with ten years of service.

Another pre-FI opportunity is to max out your Health Savings Account (HSA). It will come in handy as your healthcare expenses are reimbursed tax-free.

4. What’s next?

Lastly, you should have a plan of what’s next. You’ve spent a lot of time in a high-paced, results-oriented environment, and your spouse or partner may not like you bringing that same level of energy to your home!

Before making the complete exit, you should spend time on Plan B. See if you can replicate the experience of your new life before it happens – both financial and living.

Take six weeks off to spend with your partner to experience your new life. Start volunteering with organizations or joining boards to see if you enjoy your time spent with them.

This post gives you an idea of the financial independence possibilities, but you and your family are the ones who need to find the inspiration to make it happen.

While this overview might point you in the right direction, you should work with a professional to plan it all out. My recommendation is to start as soon as you make MD, as getting ahead on the planning will make a huge difference.