Sell assets to live, monthly, quarterly, yearly???

[jacandginny]

Holding off on drawing SS. Need to live off our savings. Others in this situation, do you sell assets on a monthly, quarterly, yearly basis? Advice please.
Thanks

[youbet]

Quote:

Originally Posted by jacandginny Holding off on drawing SS. Need to live off our savings. Others in this situation, do you sell assets on a monthly, quarterly, yearly basis? Advice please. Thanks

Welcome to the board. Please take the opportunity to introduce yourself.

Have you already figured planned distributions such as interest payments, dividend payments or capital gain distributions into your income needs?

Are there any scheduled redemptions during the time period such as bond or CD maturity dates?

After considering the above, I liquidate opportunistically, without a fixed timetable or percentage target. But note, I've already started SS and DW has a pension, so after interest and divs our need to liquidate investment holdings for current income usually is based on major expenditures such as a new car or home improvement.

You'll want to consider you AA. If your portfolio is loaded with relatively stable investments such as short term bond funds, liquidation decisions aren't very critical. If you're 100% individual stocks, selling for income needs is very much a timing issue. Since you haven't shared portfolio info, it'll be hard to comment.

Most folks here will likely recommend you hold 1 - 2 - 3 years of cash equivalent funds.

[jacandginny]

Quote:

Originally Posted by youbet Have you already figured planned distributions such as interest payments and dividend payments into your income needs? Are there any scheduled redemptions during the time period such as bond or CD maturity dates? After considering the above, I liquidate opportunistically, without a fixed timetable or percentage target.

Yes, to all of that. Then we need approx 5K a month. Been just selling assets once a month. Just wondering if that was the smartest approach.

[REWahoo]

Quote:

Originally Posted by jacandginny Been just selling assets once a month. Just wondering if that was the smartest approach.

I think it depends on what type of asset you have to sell. If you are talking about shares of a short-term bond fund, you wouldn't expect the value to fluctuate significantly over time, so month-to-month sales might be fine. If the assets you are selling are equities which could see significant swings in value over time, having to sell when they are in a decline isn't such a great idea.

Have you considered setting up a "bucket" of cash you can withdraw from monthly, replenishing it 'opportunistically' as youbet describes? That's what I set up and I use dividends from bond and dividend paying stock funds to help fund the bucket. This assists in allowing me to choose when to sell assets to top up the bucket rather than being forced to sell at a low point.

[HFWR]

Quote:

Originally Posted by jacandginny Holding off on drawing SS. Need to live off our savings. Others in this situation, do you sell assets on a monthly, quarterly, yearly basis? Advice please. Thanks

Not drawing yet, but I believe there is a "fee" associated with my 401k withdrawals, so I'll likely do larger withdrawals less often, to minimize cost.

[Animorph]

How long do you want to hold on to your investments that you will be selling?
What will happen if they suddenly drop in value before you sell?

On average, and you will be doing this for a while so you may average out pretty well, your investments will hopefully be increasing in value. So holding them as long as possible will on average be a good strategy. That argues for monthly sales.

I'm nominally 100% equities, with just a few months cash at most. I'm happy to sell equities monthly with an average market. If the market is more than 10% down from the peak I'd rather hold. If it is down 20% or more I'd rather buy. If it is exceeding my retirement projections I sell the excess. Then I have cash for expenses, or to buy in a bear market. Currently I have excess cash from 2011 sales when the market exceeded my projections early in the year. I bought a little during the last dip, but I'm still at 13% cash. Way above what I normally hold, but maybe I'll get a chance to reinvest in the next year or two.

[ripper1]

Quote:

Originally Posted by REWahoo I think it depends on what type of asset you have to sell. If you are talking about shares of a short-term bond fund, you wouldn't expect the value to fluctuate significantly over time, so month-to-month sales might be fine. If the assets you are selling are equities which could see significant swings in value over time, having to sell when they are in a decline isn't such a great idea. Have you considered setting up a "bucket" of cash you can withdraw from monthly, replenishing it 'opportunistically' as youbet describes? That's what I set up and I use dividends from bond and dividend paying stock funds to help fund the bucket. This assists in allowing me to choose when to sell assets to top up the bucket rather than being forced to sell at a low point.

+1

[Birchwood]

This is interesting since I'm going to retire in the fall.
In my case, I am planning to allocate a year's living expenses
about $60,000 plus SS which I plan to get right away. The 60K will come from my cash accounts. I will then study my equities and prob. do some conservative buy and sell, depending on the market and my study.

For major purchases and expensive trips, I may have to dig in and hopefully will not go beyond additional $25,000/year. I will try my best not to do it every year and stay below that if I can. I will refrain from buying any new vehicles and live within my means. I hope to stay to my max budget of $85,000/year.

[pb4uski]

I'm actually mulling a similar dilemma now. The January rally is about what my annual withdrawal would be so I'm considering being a dirty market timer and doing a withdrawal into cash now and letting the rest ride for the rest of the year.

[Chuckanut]

I have thought that part of the rebalancing process would involve selling assets that have an excess allocation. Depending upon how much money generates, it could be a month's or a year's withdrawal.

[misty57]

Quote:

Originally Posted by HFWR Not drawing yet, but I believe there is a "fee" associated with my 401k withdrawals, so I'll likely do larger withdrawals less often, to minimize cost.

We are not yet retired (hopefully this year), but we plan to take annual withdrawals from our 401k in December of each year to fund our needs for the following year.

[Independent]

"As needed". In practice, we probably look forward about 3 months when we sell. Stuff happens. We had bigger medical expenses than I ever imagined, a child who got caught by the economic downturn, and my former employer called to see if I was interested in a short term project. So the withdrawals we've actually made have been pretty erratic.
We don't have a lot of assets subject to dramatic market value fluctuations, and I figure we can't out-think the market, so I'm not trying to time the market.

[Midpack]

Quote:

Originally Posted by REWahoo Have you considered setting up a "bucket" of cash you can withdraw from monthly, replenishing it 'opportunistically' as youbet describes? That's what I set up and I use dividends from bond and dividend paying stock funds to help fund the bucket. This assists in allowing me to choose when to sell assets to top up the bucket rather than being forced to sell at a low point.

+2. It's painful having any cash these days with negative real returns, but necessary IMO. I am only holding a few years in cash...

[Lsbcal]

We have a reward checking account at our local CU. It pays a decent rate but that has been declining recently. We fill that up from a short term bond fund at Vanguard (VBIRX). We are taxed on that IRA money coming out of the VG account. Holding off on my SS for a few years. I think this works OK with only modest risk.

As the rate situation (yield curve) changes I will probably modify this approach. But it works OK for now.

[rescueme]

Quote:

Originally Posted by Midpack +2. It's painful having any cash these days with negative real returns, but necessary IMO. I am only holding a few years in cash...

+3 ...

I retired at age 59. A few years before, I started selling off profits from many years of gains and simply put them in a MM account with an initial target of 4-5 years of gross retirement (e.g. includes taxes due on tax-deferred funds). This was done for both DW and myself.

Now at age 64, almost five years into retirement with this "cash bucket" as my only income (no pension, no SS - yet), the plan has worked out well, IMHO.

When the market is up (as it has been lately) or like early last year, along with certain funds doing well (think of GMNA's in the past), more comes off the table. I'm a bit like the farmer who puts grain into the silo on good years and only takes it out in bad.

So in answer to the OP's question, I don't sell equity/bond positions on a set schedule, but rather when it makes sense to do so.

At the same time, the actual amount of cash held over time will be greatly reduced after I start claiming against DW's SS (50% spousal claim) in just over two years, and even more so once my SS starts at age 70.

[pops]

Quarterly.

[Onward]

Annually move one year's expenses from investment portfolio into short-term bond fund (VBISX). Fund the year with short-term bond fund.

Date of annual move is fixed, to discourage attempts at market timing. Yes, even I am tempted sometimes.

Having the year's expenses in a stable bond fund prevents me from "feeling" the ups and downs of the stock market too much. I sleep better.

[jebmke]

Retired at 55, now 59. Pension does not start until 65.

I hold no cash. If expenses are less than what is in the sweep account (distributions in taxable) I sell something. Otherwise, I do nothing.

Most of our expenses are on credit cards. By end of month, I know what cash needs are for next month and I can sell off pretty much exactly what I need.

[WilliamG]

Quote:

Originally Posted by Onward Annually move one year's expenses from investment portfolio into short-term bond fund (VBISX). Fund the year with short-term bond fund. Date of annual move is fixed, to discourage attempts at market timing. Yes, even I am tempted sometimes. Having the year's expenses in a stable bond fund prevents me from "feeling" the ups and downs of the stock market too much. I sleep better.

Do you write checks from the bond fund or move it periodically to a banking account?

[Alan]

Quarterly dividends and year end capital gains into a sweep account, then in January empty the sweep account into a savings account to use throughout the year. Any shortfall is topped up from cash savings.

I have pensions that currently cover about 70% of budgeted spending.