Golden Handcuffs: Definition, Types, Benefits and Examples

Ive recently had conversations with clients about the curse of the golden handcuffs. One client is an older professional with many years in her field. She is at the top of her game, and though shes unhappy with what shes doing, with young children in a private school and a big house payment, she is handcuffed. On the other hand, I have a client who is a recently minted Ph.D. with a lot of flexibility. Hes worried he will find himself in a situation where hes locked by golden handcuffs and separated from what he values most.

Start by imagining the future you seek. This should be a lifestyle you can picture for yourself and, if its the case, your partner and family. What does your lifestyle look like in five years? Have you sold your house, retired or purchased an RV you can live out of? Could you imagine yourself working in some far-flung part of the world in the Peace Corps?

If you wish to free yourself from golden handcuffs in order to make social change, consider what meaningful work would look like for you. For example, while the Peace Corps is not for everyone, there is a range of options for volunteering, including AmeriCorps Seniors, Foster Grandparents or the American Red Cross. Even as a volunteer, you might be compensated with a stipend or have your meals and housing covered.

More conventional options (especially if you are mid-career) can be found by researching job boards that post purposeful careers like Idealist or B Work. There are also good books out there on meaningful careers, including Compassionate Careers: Making a Living Making a Difference and Meaningful Work: A Quest to Do Great Business, Finding Your Calling, and Feed Your Soul.

In order to make the timetable realistic and something you can stick with, you might need to work with a career coach, a financial adviser, or an educational counselor. Commit your timeline to paper and share it with family and friends. Their role will be to prod you periodically, thereby keeping you on track.

Work Addiction and The Golden Handcuffs – How Money Works

Types of golden handcuffs

There are several types of golden handcuffs that employers may use to encourage people to stay with their company. Here are some common types of golden handcuffs:


Milestones involve rewarding employees as they complete various tasks over an extended period of time. For example, a new employee at a software company may have accepted their job because of the extensive benefits, including quarterly bonuses, catered lunches and a free gym membership. The employee can enjoy these benefits after six months of working with the company, encouraging them to stay for at least that amount of time. Similarly, a company may only offer bonuses to employees after theyve worked for the company for a year or longer.

Stock opportunities

Stock investment opportunities are a common form of golden handcuffs. Many corporations offer employees the option of holding company shares, meaning that the success of the business or industry directly impacts the amount of money they can make from the investment. This gives employees an incentive to work hard and remain loyal to the company.

Supplemental executive retirement plans (SERPs)

A supplemental executive retirement plan (SERP) is another example of an incentive that employers use to keep employees. SERPs are sets of benefits usually offered to high-ranking employees at a corporation. The company and the employee negotiate a specific amount of supplemental retirement income, granted that the employee meets certain eligibility requirements during their time working. Once retired, the employee can withdraw the accumulated money from the plan, for which they have to pay state and federal taxes.


One of the most recognized versions of a golden handcuff is a salary bonus. Bonuses are supplemental money paid to employees, usually on a quarterly or annual basis. Some employers offer bonuses as a benefit of working for their company. For example, a company that pays its employees an average annual salary may entice people by advertising the likelihood of a large bonus if the company meets its revenue goals. In other instances, companies award high-ranking officials with bonuses to encourage them to remain loyal to their organization.

Small incentives

Companies may provide employees with a variety of small incentives to keep them happy and working for their corporation. For example, a software developer may feel more comfortable working at a company that offers unlimited paid time off and a company computer, no matter the workload or salary. Other examples of small incentives include longer breaks, free lunches and gift cards.

What is a golden handcuff in the workplace?

A golden handcuff is an incentive that management provides employees to encourage them to stay with their company for the long term. Golden handcuffs are a common tool in employee management, especially when employers want to retain employees who excel in their work. Golden handcuffs are common within industries where employees receive high compensation and are likely to receive competitive offers from other companies during their employment, such as the tech and financial industries. Common examples of golden handcuffs include salary bonuses, stock opportunities, company cars and tuition assistance.

Benefits of golden handcuffs

Here are some of the most common benefits of using golden handcuffs in the workplace:

Increase employee retention

Golden handcuffs encourage employees to stay with their employer for a foreseeable period of time. Golden handcuffs often have conditions attached to them, encouraging employees to stay long term to keep their employment benefits for as long as possible. For example, high-ranking officials at a bank may have an arranged payout should they leave their company after a specified date. If they choose to leave after that date, they can take their payout.

Demonstrate employee appreciation

Companies use golden handcuffs to demonstrate their appreciation for their high-ranking and hard-working employees. They may award bonuses specifically to individuals who surpass the expectations of their job, which might bring supplemental revenue and overall success to the company. Employers use golden handcuffs as incentives to show employees the importance of their role in a company and encourage them to continue working for a place that appreciates their skills and expertise.

Make recruiting new employees easier

Golden handcuffs are also a helpful tool for recruiting new employees for a company. When interviewing top industry candidates, employers may use incentives such as a company car, annual bonus or a SERP plan to entice a candidate to accept their job offer. Similarly, golden handcuffs can benefit companies by convincing talented candidates to work for them and consider their offer first.

Examples of golden handcuffs in the workplace

Here are a couple of real-world examples of golden handcuffs in the workplace:

Large bonus example

A software engineer is looking for a new job after receiving a prestigious certification that usually results in an increased salary. They interview at five of the top software development companies in the country, but ultimately are interested in two of the companies. One company, called Alleviated Tech, is offering the engineer a yearly salary of $300,000 with the typical benefits of health insurance, retirement plans and paid time off.

The other company, Comet Software, is offering a yearly salary of $270,000, the same benefits as Alleviated Tech and a golden handcuff bonus of up to $20,000 per quarter. Even though Alleviated Tech is offering the engineer a higher annual salary, they ultimately choose to work for Comet Software, as the combined bonuses of $80,000 a year outweigh the extra $30,000 offered as a yearly salary.

Payout agreement example

A high-ranking business executive has worked for a medical equipment manufacturing company, Heal Tech Inc., for nine years. Health U.S., a rival company, has recently offered them a new position that would pay $30,000 more in annual salary than Heal Tech Inc. The executive strongly considers taking the new job but remembers that theyve signed a contract with their employer, specifying that they can only receive their employment payout after 15 years at Heal Tech Inc.

The agreement between the executive and Heal Tech Inc. states that after 10 years of work at the company, the employee can receive a payout of $200,000, working as a golden handcuff to incentivize them to stay with the company for at least a decade. They ultimately decide to stay with Heal, as the money theyd earn from the payout outweighs the extra income theyd earn at Health U.S.


What is the meaning of a golden handcuffs?

Golden handcuffs are financial incentives given to employees to discourage them from leaving a company. Employers offer incentives in order to retain individuals that have performed well for the company or those that have exceptional or irreplaceable skills.

Are golden handcuffs worth it?

Golden handcuffs are a financial trap that employers create to discourage workers from leaving jobs that are usually very time-consuming, exhausting, and never-ending. Think of an incredibly high salary you could probably never earn at another organization.

How long do golden handcuffs last?

Types of golden handcuffs

The employee can enjoy these benefits after six months of working with the company, encouraging them to stay for at least that amount of time. Similarly, a company may only offer bonuses to employees after they’ve worked for the company for a year or longer.

How do you overcome golden handcuffs?

How To Escape Your Golden Handcuffs
  1. Step 1 – Review Your Budget. Track your spending – You may not need as much as you think to survive. …
  2. Step 2 – Increase Your Cash Runway and Emergency Fund. …
  3. Step 3 – Make Yourself More Marketable. …
  4. Step 4 – Schedule Some Personal Time and Consider: …
  5. Step 5 – Make the Change.

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