When Your Costco Stock Becomes Your Retirement Paycheck

If you hold six or seven figures of Costco stock, you probably check the COST price more often than you'd admit. I don't blame you. I'd probably do the same.

Thousands of long-tenured Costco professionals are in the same spot. Your T. Rowe Price 401(k) lets you buy Costco stock, and as the stock climbed over 10, 20, and 30 years, your position climbed right along with it. COST is up more than twentyfold since 2009.

Watching the stock cross $1,000 a share for the first time was exciting. As I write this in late September 2026, it's trading around $900, a bit below that high. When a move like that potentially costs you hundreds of thousands of dollars, it becomes a lot more real.

What Wall Street says about Costco stock in 2027

There's no shortage of reports predicting where COST goes in 2027. I could throw my hat in the ring and add my own forecast to the pile, but I'd rather talk about something more useful. Nobody knows where one stock will trade next year, and that includes us. What we can plan around is what a swing in that stock does to your retirement.

Picture this: you retire tomorrow

Imagine you've just realized you could retire tomorrow. Your paycheck stops coming from Costco. From now on, it comes from your investment portfolio.

Now imagine that portfolio is mostly COST. When the market swings and Costco stock drops, your retirement paycheck can drop right along with it.

This isn't a rare setup. Costco's CFO has acknowledged that many thousands of the company's hourly workers have crossed $1 million in their 401(k) accounts, a point we covered when the Wall Street Journal ranked the plan among America's most generous. The plan has capped new Costco stock purchases at 50% of your account since 2016, but older positions above that line were grandfathered in. Plenty of 30-year employees hold far more than half their balance in one company.

Nobody wants a pay cut in retirement and once the paychecks stop, there's no next raise to make up the difference.

Why selling in a down market hurts

Stay concentrated in one stock (or in stocks in general, for that matter), and that pay cut becomes a real possibility. Simply because in retirement, you have to sell something every month to fund your life. When the stock is down, you have to sell more of it to get the same income.

Here's an example. Say you need $10,000 a month. At $1,000 a share, that's 10 shares. At $800 a share, it's 12.5 shares. Spend a year drawing income at $800 and you've sold 30 extra shares. Those shares aren't around for the rebound when the price comes back.

Planners call this sequence-of-returns risk: a bad stretch early in retirement does more damage than the same bad stretch later on. One concentrated stock makes those stretches deeper and more frequent.

The good news: the growth gives you options

Costco stock has done incredibly well for a long time. That's the good news, and it's exactly why now may be a good time to review how the position fits your broader retirement strategy. The question is whether it makes sense to capture some of that growth and diversify.

How you do it matters as much as whether you do it. A few Costco-specific pieces to weigh:

• Selling inside the 401(k) is tax-free. Moving Costco shares into other funds within the plan doesn't trigger a tax bill. It's the simplest way to trim.
• Low-basis shares may be worth keeping for NUA. Net unrealized appreciation (NUA) lets you take Costco shares out of the plan at retirement, pay ordinary income tax only on what you originally paid for them, and pay long-term capital gains rates on the growth when you sell. Shares you sell inside the plan give up that break.
• The NUA window is easy to close by accident. Rolling the whole account to an IRA first, or taking a partial withdrawal in the wrong year, can end the option.
• Washington has its own wrinkle. Selling NUA shares from a taxable account can trigger Washington's capital gains excise tax. Spreading sales across years often helps.

So the answer is rarely "sell it all" or "keep it all." It's how much, from where, and in what order. Your situation may differ, so coordinate any of this with your financial advisor and CPA before you act.

Looking at COST through a retirement lens

I'd encourage every tenured Costco millionaire to look at their COST holdings through the lens of long-term retirement success, not next year's price target.

If you'd like a second set of eyes, we're right down the road from Costco headquarters in Issaquah. Come in or reach out, tell us what's on your mind, and we'll show you where you stand.

You can schedule a free, no-pressure meeting right here.

Gevers Wealth Management, LLC is an investment adviser registered with the SEC. This article is for educational purposes only and isn't individualized investment, tax, or legal advice. Past performance does not guarantee future results. Gevers Wealth Management is an independent investment adviser and is not affiliated with, endorsed by, or sponsored by Costco Wholesale Corporation.