If you work at companies like Amazon, Microsoft, NVIDIA, Lockheed Martin, or Northrop Grumman, there’s a good chance your financial life is tied to one company in more ways than it first appears.
- Your salary
- Your bonus
- Your RSUs or stock options
- And often, a meaningful portion of your overall investment portfolio
On paper, that can look like success. And in many ways, it is. But underneath that success, it can quietly create a single point of failure.
If the company experiences normal business cycles, it’s not just your job that feels the impact. It’s your net worth and, eventually, your retirement timeline.
That’s the concentration trap.
Why RSUs Quietly Become a Problem
RSUs feel safe because they vest over time. But each vesting cycle quietly increases your exposure to the same company, often without a clear decision point attached to it.
Over time, many professionals simply hold what vests. Without realizing it, a single stock position can grow to 30%, 40%, or more of their total net worth.
That’s not really a strategy. It’s just momentum.
The Shift: From Growth to Income
As you approach retirement, the goal naturally changes.
You are no longer trying to maximize upside. You are trying to turn what you’ve built into reliable, predictable income.
This is where a lot of people get stuck:
- They don’t want to sell because of taxes, loyalty, or fear of missing out
- But they also don’t have a clear plan for how this becomes income later
So the concentration just stays in place longer than it probably should.
A Better Approach: Turning RSUs Into Income
Instead of asking, “Should I sell?”, a better question is:
How do I turn this into income in a disciplined way while managing risk?
1. Define what “enough” looks like
Decide how much exposure to a single stock actually feels reasonable for your situation. For many households, that tends to be somewhere in the 5% to 15% range, not 40% or more.
2. Treat RSUs as income first
When RSUs vest, it’s helpful to think of them as compensation, not as something that should automatically become a long-term holding.
3. Diversify with intention
Instead of making one large decision, build a repeatable process. Sell gradually over time and reinvest in a diversified portfolio that matches your long-term goals.
4. Build the income side early
It’s often easier to transition gradually than to try to do everything at once later. Shifting part of your portfolio toward income-producing assets over time can reduce pressure later on.
5. Be deliberate about taxes
Coordinating stock sales with your broader tax situation can make a meaningful difference over time, especially during high-income years.
What This Means for You
The goal isn’t to eliminate company stock. It’s to make sure it’s working as part of your plan, not unintentionally dominating it.
Over time, the transition looks like this: concentrated growth becomes diversified income.
When that shift happens intentionally, it tends to create:
- More stability through different market environments
- More flexibility in retirement timing
- More confidence in long-term spending decisions
Because eventually, the question stops being:
“How much can I make?”
And becomes:
“How reliably can I live on what I’ve already built?”
A Practical Way to Think About Concentration Risk
There is no single “right” answer for how much company stock is too much. The right level depends on your income stability, stage of life, liquidity needs, and how much risk you are actually comfortable carrying once you zoom out from the day-to-day market noise.
That said, it can be helpful to use broad reference points to understand where you might sit today.
- Under 10%: Generally viewed as well diversified for most households
- 10% to 20%: A moderate level of concentration that should be monitored over time
- 20% to 40%: High concentration where planning decisions start to matter more
- Above 40%: Significant concentration where outcomes can become heavily dependent on a single company
These are not rules or thresholds that automatically trigger action. They are simply reference points to help you understand how much of your financial future is tied to one outcome.
What matters most is not where you fall on a chart, but whether your current level of exposure still feels appropriate given what you want your future to look like.
Why This Comes Up So Often in Seattle and Denver
In cities like Seattle and Denver, it is very common for professionals working at companies such as Amazon, Microsoft, Lockheed Martin, and similar employers to build a large portion of their wealth through equity compensation.
Over time, RSUs, stock grants, and employee stock purchase plans can quietly accumulate into a position that becomes much larger than most people originally intended.
It rarely happens all at once. It builds gradually, often while everything feels like it is going well.
The challenge is that what begins as a powerful wealth building tool can eventually become a dominant driver of long-term financial outcomes if it is never intentionally addressed.
The goal is not to avoid company stock. It’s to make sure it remains one part of your plan, not the foundation your entire retirement depends on.
The Key Question
If your company stopped outperforming tomorrow, would your financial plan still work?
Disclosure: This article is intended for educational purposes only and is not personalized investment, tax, or legal advice. Your situation is unique, and decisions should be based on your individual goals, risk tolerance, and financial circumstances. Investing involves risk, including possible loss of principal, and past performance does not guarantee future results.
