This family needs to reel in safe returns. By Jeffrey R. Kosnett, Senior Editor July 31, 2007 Scott Glassen loves fishing so much that his wife, Charlotte, jokes that his true calling is to own a bait shop. But the couple are serious about leaving Somerset, N.J., for someplace where the fish bite more and taxes bite less when Scott retires in 14 years from his job at the local electric utility.Scott, 41, saves much of his overtime pay, but those hours are unpredictable. He and Charlotte, 40, will pay off their mortgage in 2021, when their daughters are 21 and 18. By then, assuming regular contributions and 8% returns, the Glassens' retirement accounts should total about $1 million. Plus, Scott has a decent pension. RELATED STORIES New Jobs, New Life, Clean Slate See More Financial Makeovers That's not too shabby, but is it enough to quit at 55? That depends on inflation, health-insurance costs, college plans and other factors that can't be known with certainty. If, say, you withdrew $5,000 a month, assuming 3% inflation, 8% returns and a 25% tax rate, you'd exhaust $1 million in 25 years. So a 2021 retirement seems like a stretch. Advertisement But the couple have an ace in the hole. Since 2000, Charlotte's relatives have given the family a bunch of shares in steel maker Nucor. The stock's been quite a catch, as it has climbed tenfold since late 2000. The Glassens' 7,300 shares are worth $500,000. Even now, Nucor isn't overpriced. At $67, it trades at 12 times estimated 2007 earnings. But Nucor's prospects are beside the point: Charlotte needs to diversify and trade potential future gains for safety. Financial planner Ray Padrón, of Brightworth, in Norcross, Ga., says that anyone with a concentrated portfolio must answer two questions. First, what's the real-life impact if its value plunges? Second, how much time would you have to recover? Moreover, if you sell, what about taxes? And what would you do with the proceeds? Prudent selling Scott and Charlotte can forget about early retirement if Nucor stumbles. As Karen Keatley, of Keatley Wealth Management, in Charlotte, N.C., notes, "With a single stock, you could lose 15% just like that on any bad news." In addition, the 15% tax rate on long-term capital gains may be higher in the future. So, Padrón says, it's better to sell sooner than later. It's okay to keep up to 10% of your investments in one stock. The Glassens will have to calculate the taxable gain on the stock they sell based on the price at which their relatives bought it. If they sell in stages, they should unload shares with the highest basis first to minimize taxes. Advertisement With the proceeds, Scott and Charlotte should invest in low-cost mutual funds, with about 75% in stocks, says Keatley. If the portfolio generates 8% returns without the stress of relying on one stock, Scott and Charlotte will hook a leisurely waterside retirement. Stumped by your investments? Write to us at firstname.lastname@example.org.