Managing Withdrawals beyond writing a check

[steady saver]

DH retired in 2020. Nothing has really changed in how we spend money. We receive a pension that is deposited every month. When we have an expense out of the ordinary (a new car), we have simply written a check.

But now we are planning on a major home renovation. I know we can afford it. FireCalc checks out 100% every which way I do it. Logic tells me we can do it. (Can you tell I'm a bit nervous?) But since I am simply accustomed to writing a check, I’ve now entered strategic withdrawal territory. Hoping for a bit of guidance here.

Because I've been doing other things and not paying attention, ha, I am realizing we’d have enough in our money market funds to cover or mostly cover the project. So I am grateful for that obviously. But I could use this as an opportunity to liquidate all or most of our individual stock holdings (just 10 - all long term investments) and clean things up a bit, and then reconsider and rebalance our AA, moving to a much simpler one to three fund strategy. That said, we make about 37K each year from combined dividends. Some stocks I can part with fairly easily but others I’m wondering if I should be holding onto (specifically Google and Apple which make up about 12.5% of the individual investment account and pays no or low dividend). Additionally we have 22% in company stock which offers an excellent dividend itself (half of our dividend income) so not sure it makes sense to give up. In addition, 33% of this individual investment account is already VTI and I am holding that regardless.

To summarize, the options as I see it are:

1. Use all money market cash to fund project
2. Use the opportunity to get rid of all individual stocks to fund the project. Regroup by using the sale of these stocks to reset AA and invest only in one to three broad based index funds moving forward.
3. Do a combination of both options above. For example, since half of our yearly dividends come from the one company stock, does it make sense to keep that and make up the difference in the project cost with cash from our existing MM?

What am I missing here? Things I need to consider that I’m simply overlooking? We are in talks with the contractor now. Once I know when we’d start and when we’d need funding, I can decide if it makes sense to shift any of the money from sold securities (if I do that) into a shorter term CD or simply park it in the MM. And then, of course, decide whether to see now or after the first of the year.

Thanks for taking a look and offering your thoughts.

 

[2017ish]

What types of accounts are the assets in? Tax Deferred, Roth, or regular brokerage?

What are the tax implications of withdrawals (from IRAs) or capital gains, given the pension income? Do you have social security payments on the horizon as well, which would change your tax bracket when they start?

 

[steady saver]

These are all from our Individual Investment account, all taxable. We have a separate Retirement account that contains our 401K and Rollover Roth. We are 61 and almost 61. Plan to take SS at age 67.

 

[steady saver]

Sorry I wasn't clear. That's an obvious omission and good question.

 

[jazz4cash]

22% in company stock is jaw dropping
Edit: Should’ve said 22% in ANY one stock.

 

[steady saver]

22% in company stock is jaw dropping
Edit: Should’ve said 22% in ANY one stock.

It is high but this is 22% of our Individual investments. The overall percentage was higher when we had company stock in our 401K as well but I sold that. It's currently about 12% of total portfolio

 

[Exchme]

Diversifying to reduce dependence on those 3 stocks sounds like a good idea. Before selling, I would examine the unrealized gains, you don't want a nasty tax or IRMAA surprise. I would make a plan on how to whittle them down with the least pain.

 

[steady saver]

Exchme, that's a dilemma and one reason I've not sold them yet. All but one have gains, some significant. It's a first world problem, I know, but still. This would be the time to open a doner-advised fund but that doesn't address my need for funds for the renovation project.

Perhaps digging deeper and going with a combination of selling some but not all stocks would make the most sense. Except my goal is still to make it as easy as possible. DH has little interest in the investments and I am finding I don't have the same keen interest as I once had in the accumulation phase.

Cleaning this up and addressing some of these issues is something I've been needing to do...the renovation just presses the issue, which is a good thing.