If one stock has grown into a large part of your portfolio, it probably feels like a good problem to have. Maybe you worked for the company. Maybe you bought it years ago and watched it grow. Maybe stock grants, options, or long-term investing helped turn that position into a major source of wealth.

But as you get closer to retirement, that same success can create a serious planning issue.

A concentrated stock position can build wealth, but it can also threaten the financial security you have worked so hard to create. The question is not just, “Has this stock done well?” The better question is, “What happens to my retirement if this stock has a terrible year?”

That is where many retirees and pre-retirees get stuck.

They know they may have too much of one stock, but they are afraid to sell because of the capital gains tax. So they do nothing. They keep holding. They hope the company remains strong. They tell themselves they will eventually figure it out.

The problem is that waiting can be risky.

In retirement, a major drop in one stock can do permanent damage. If that position represents 5% of your portfolio, a sharp decline may be painful but manageable. If it represents 20%, 30%, or 50% of your portfolio, the impact could change your income plan, your lifestyle, and your long-term security.

A simple way to think about it is this: if the stock went to zero, would it affect your financial future in a way you could not comfortably recover from? If the answer is yes, it may be time to create a strategy.

That does not always mean selling everything at once. In fact, for many people, the better approach is a gradual, tax-aware plan.

One potential strategy is tax-loss harvesting. This involves using investment losses elsewhere in a portfolio to help offset gains from selling part of the concentrated position. The goal is to reduce risk without creating an unnecessary tax burden all at once.

Another option may be using hedging strategies. For certain investors, options can be used to help protect against a major decline in a stock’s value. This might include buying downside protection or using covered calls to help offset the cost. These strategies can be complex, so they should be handled carefully and with professional guidance.

Some investors may also consider exchange funds, charitable giving strategies, or other planning tools depending on their goals, income needs, tax situation, and estate planning priorities.

One common argument for holding a highly appreciated stock is waiting for a step-up in basis. That can be a legitimate estate planning strategy in some cases. But it is not always the right answer.

Before relying on that approach, you need to ask important questions. Do you need this money to support your retirement income? Can you afford a major decline? Do you believe the company will remain strong for the next 20, 30, or 40 years? Are you comfortable betting your future on one company’s leadership, business model, and ability to stay relevant?

The world changes quickly. Companies that once seemed untouchable can fall behind. New technology, changing consumer behavior, competition, or poor leadership decisions can dramatically affect a stock’s value. Even strong companies can face long periods of decline.

That is why the tax tail should not wag the retirement dog.

Yes, taxes matter. Capital gains taxes should be considered carefully. But avoiding taxes should not come at the expense of protecting your retirement.

The right plan depends on your personal situation. How much of your portfolio is tied up in one stock? What is your cost basis? How much income do you need? What other assets do you have? Are you charitably inclined? Do you want to leave assets to heirs? How much risk can you truly afford?

If you are holding a large stock position and you are unsure what to do, the most important step is to run the numbers. A thoughtful strategy can help you reduce risk, manage taxes, and protect the wealth you have already built.

To talk through your options and create a retirement plan built around your goals, schedule a consultation with Leibel Sternbach at: https://www.yields4u.com/pages/book