Maximize Your Cardinal Bonus and LTI: Smart Moves for Your Variable Compensation
August brings more than just summer heat— for many Cardinal Health employees, it also brings your annual bonus and LTI. This variable compensation aren’t just rewards for your hard work—they’re tools that, when used wisely, can accelerate your journey toward financial independence.
When I was employed at Cardinal Health, I was fortunate to receive variable compensation for most of my career. These rewards were meaningful, and they offered a unique opportunity to accelerate progress toward my long-term goals.
That said, I learned firsthand how easy it is for this money to disappear without much to show for it. Without a clear plan, bonuses and stock awards can quickly be absorbed into day-to-day spending or short-term decisions. That’s why it’s so important to be intentional—ideally before the dollars even arrive.
The first step is to do a quick check on your tax situation. Bonuses are typically subject to supplemental withholding, and stock awards may trigger additional tax liabilities depending on how and when they’re sold. Setting aside adequate tax dollars ensures that what you receive is truly yours—and not, in part, Uncle Sam’s.
Next, take time to evaluate your long-term incentive stock awards. Should you sell the shares once they vest, or continue to hold them? The right decision depends on your overall financial picture, risk tolerance, and how much exposure you already have to Cardinal Health stock. For those with RSUs, it’s important to understand how taxes work. While Cardinal’s stock has performed well in recent years, the bulk of your tax liability is triggered at vesting—not when you sell. That’s because the value of the shares at vesting is treated as ordinary income, and this happens automatically. Selling the shares later may result in additional capital gains taxes, but for most employees, those are typically less significant than the taxes owed at vesting.
Once you’ve accounted for taxes and made decisions about your stock holdings, you’ll have a clearer picture of your actual “take-home” variable comp. With that clarity, you can begin to allocate the available cash in a way that supports your financial goals.
While the ideal way to allocate additional funds is within the framework of a personalized, comprehensive financial plan, here’s a quick list of strategies we might recommend to clients:
- Pay Down High-Interest Debt
If you have credit card balances or personal loans with double-digit interest rates, using part of your variable comp to pay them down can be one of the most impactful financial moves. The “return” from eliminating high-interest debt often exceeds what you could earn through traditional investments. - Top Off Emergency Savings
Ensure you have 3–6 months of expenses set aside in a high-yield savings account. This provides flexibility and peace of mind in case of unexpected changes. - Maximize Retirement Contributions
If you’re not already on track to max out your retirement accounts, consider using your bonus to boost contributions to your 401(k), IRA, or Roth IRA. If you’re already contributing, you might increase your deferral rate for the rest of the year and use your bonus or stock compensation to offset the reduction in take-home pay - Further Fund Your Health Savings Account (HSA)
If you’re enrolled in a high-deductible health plan, contributing to an HSA offers triple tax advantages—deductible contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses. - Contribute to a 529 Plan
A 529 plan offers tax-deferred growth and may provide state tax benefits, making it a smart way to save for future education costs. It also allows for easy lump-sum contributions. And thanks to recent legislation, unused funds may be eligible for conversion to a Roth IRA—creating a valuable opportunity to grow long-term savings for your loved ones. - Invest in a Taxable Brokerage Account
If your retirement accounts are on track, consider investing in a diversified portfolio through a taxable account to grow long-term wealth. These funds offer added flexibility—especially valuable if you're aiming for early retirement—since they can be accessed without age-based withdrawal restrictions. - Set Aside for Upcoming Expenses
Allocate funds for known short-term goals—vacations, home improvements, or tuition payments—so you’re not relying on credit later. - Evaluate Charitable Giving
If philanthropy is part of your values, consider making a tax-deductible donation or funding a donor-advised fund. - Create Memorable Experiences
Last, but not least, if you're on track toward your financial goals, consider using part of your bonus to invest in meaningful experiences—like travel, family adventures, or celebrating personal milestones. These moments often create lasting fulfillment and, research shows, tend to bring more long-term happiness than material purchases.
None of us execute these priorities perfectly—myself included. But hopefully, this list sparks ideas for making the most of your Cardinal Health variable compensation. If you’d like help prioritizing your options or are interested in a comprehensive financial plan to gain greater clarity, we’re here to support you.
Take care and, as always, stay the course!
Colburn Wealth Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.