We all have heard the key rule for saving and investing which is “the earlier, the better,” whether for a dream vacation or planning for retirement. A similar principle applies to workplace benefits: Harnessing the power of compounding can help you reach your financial goals more quickly.
The total rewards your company offers go beyond your salary—your compensation can include everything from healthcare to equity compensation. Remaining at a role longer-term can be more than just a milestone: Tenure may unlock certain features in your workplace benefits, or simply allow workplace investment accounts such as 401(k)s to build and have a greater impact on your overall financial trajectory.
Let’s walk through the power of vesting schedules, classic compounding interest, and how this all comes together in your workplace benefits.
1. Shift your perspective—some workplace benefits are investments that compound over time
While your salary is important, your workplace benefits play a crucial role your overall earnings—they can even be an investment. In fact, our research shows that 90% of employees believe that workplace benefits are essential to meet financial goals.1
For example, your 401(k) contributions grow tax free, and can be invested in a range of funds and assets to fit your risk tolerance and time to retirement. If your employer offers a match, they’ll contribute a dollar-for-dollar amount up to a certain limit—augmenting your initial investment. Over time, you also earn interest on those investments in your 401(k) account – resulting in compounded earnings.
Equity compensation can also be viewed as an investment. The value of your equity awards is directly tied to the company’s performance and stock price. If the company experiences growth, the value of the equity held by employees will likely increase (and vice versa). So, depending on market conditions, company stock has the potential to outpace standard bonuses. Plus, awards may be eligible to earn dividends or dividend equivalents, which can accrue over time. You also have the potential to earn proceeds or diversify your holdings by selling any company stock during open trading windows—just be mindful of tax consequences as well as your overall financial strategy.
2. Check if your workplace benefits are tied to vesting schedules
Each financial benefit that you enroll in has its own unique structure and comes with its own set of guidelines. Some may require you to fulfill a certain period of employment before you are entitled to the full balance (or become “fully vested”). For example, with retirement accounts like 401(k)s, while your own contributions are always yours, you may need to remain at your job for a certain number of years to be able to take home any employer matching contributions. This is usually determined through “cliff vesting” (100% after required years, and none before) or “graded vesting” (keep a certain percentage each year).
Similarly, equity compensation, if you are eligible, offers the potential for you to share in the success of your company. Oftentimes, equity awards follow vesting schedules before you gain ownership of the shares awarded, sometimes tied to performance or time served. Once stock options have vested, after
you leave your job, you might typically have 90 days to exercise, meaning you can purchase the shares at the predetermined price. After that, your shares will go back into your company’s employee option pool.
One popular vesting schedule for equity is over four years, with a one-year cliff: Meaning, equity compensation begins vesting once the recipient has been with the company for one year, and after that year, a portion of their equity compensation will vest each month until the equity is fully vested at four years. Even so, potential growth starts on the award’s grant date—not the date of vesting. So, depending on market conditions, the financial value can be growing even while you wait to vest.
3. Evaluate how your benefits fit into your overall financial picture
No matter where you are in your career, it’s important to understand the role that your workplace benefits play in your overall financial picture. Review your savings, understand the terms of your benefits and have a plan for rolling over or managing any investment-related benefits.
Also, consider the impact on any additional benefits: Our research shows that 9 in 10 employers are now offering financial wellness benefits.1 If you’re enrolled in a student loan repayment plan, you may be expected to repay some or all the assistance if you don’t meet a certain length of employment. And the sandwich generation, caring for aging parents and growing children simultaneously,2 may be enrolled in employer-sponsored childcare and eldercare stipends.
Investing can be complex. If you need help navigating the financial aspects of your workplace benefits. It may be helpful to reference your employer’s educational content, or even potentially connect with a financial coach or advisor. No matter your workplace benefits enrollments, your overall compensation should be able to support your financial goals. Make sure you understand the full picture of what you get from your company, what it’s worth, and how it can build over time to help you reach your goals.
Investing—even through workplace accounts—can be complex. It may be helpful to reference your employer’s educational content, or even potentially connect with a financial coach or advisor.
This material has been prepared for informational purposes only. It does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. Morgan Stanley Smith Barney LLC (“Morgan Stanley”) recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a Morgan Stanley Financial Advisor. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives.
Employee stock plan solutions are offered by E*TRADE Financial Corporate Services, Inc., Solium Capital LLC, Solium Plan Managers LLC and Morgan Stanley Smith Barney LLC (“MSSB”), which are part of Morgan Stanley at Work.
Morgan Stanley at Work services and stock plan accounts are provided by wholly owned subsidiaries of Morgan Stanley. Morgan Stanley at Work stock plan accounts were previously referred to as Shareworks, StockPlan Connect or E*TRADE stock plan accounts, as applicable.
In connection with stock plan solutions offered by Morgan Stanley at Work, securities products and services are offered by MSSB, Member SIPC. E*TRADE from Morgan Stanley is a registered trademark of MSSB.
All entities are separate but affiliated subsidiaries of Morgan Stanley.
When Morgan Stanley Smith Barney LLC, its affiliates and Morgan Stanley Financial Advisors and Private Wealth Advisors (collectively, “Morgan Stanley”) provide “investment advice” regarding a retirement or welfare benefit plan account, an individual retirement account or a Coverdell education savings account (“Retirement Account”), Morgan Stanley is a “fiduciary” as those terms are defined under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and/or the Internal Revenue Code of 1986 (the “Code”), as applicable. When Morgan Stanley provides investment education, takes orders on an unsolicited basis or otherwise does not provide “investment advice”, Morgan Stanley will not be considered a “fiduciary” under ERISA and/or the Code. For more information regarding Morgan Stanley’s role with respect to a Retirement Account, please visit www.morganstanley.com/disclosures/dol.
The laws, regulations, and rulings addressed by the products, services, and publications offered by Morgan Stanley and its affiliates are subject to various interpretations and frequent change. Morgan Stanley and its affiliates do not warrant these products, services, and publications against different interpretations or subsequent changes of laws, regulations, and rulings. Morgan Stanley and its affiliates do not provide legal, accounting, or tax advice. Always consult your own legal, accounting, and tax advisors.
This material may provide the addresses of, or contain hyperlinks to, websites. Except to the extent to which the material refers to website material of Morgan Stanley Wealth Management, the firm has not reviewed the linked site. Equally, except to the extent to which the material refers to website material of Morgan Stanley Wealth Management, the firm takes no responsibility for, and makes no representations or warranties whatsoever as to, the data and information contained therein. Such address or hyperlink (including addresses or hyperlinks to website material of Morgan Stanley Wealth Management) is provided solely for your convenience and information and the content of the linked site does not in any way form part of this document. Accessing such website or following such link through the material or the website of the firm shall be at your own risk and we shall have no liability arising out of, or in connection with, any such referenced website.
Morgan Stanley Wealth Management is a business of Morgan Stanley Smith Barney LLC.
© 2025 Morgan Stanley. All rights reserved.
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.
