It's (mentally) hard to sell my investments

[MRG]

Like others spend your interest and dividends first then sell. Your mindset served you well in the past, now is a new phase where you optimize your spending and enjoyment. Nobody is going to take it with them so enjoy.

 

[NW-Bound]

When I stopped working at 55, I had no choice but to sell and live off my after-tax accounts, while waiting for 59-1/2 to tap our retirement accounts. I nearly depleted my after-tax accounts in those years. But at the same time, I had a serious health problem to worry about, and the money issue was nothing compared to that if the money could be called an issue.

Now, no longer having college-aged children, no mortgages, no loans of any kind, I am spending way less than the dividends and interests that my stash generates, even after paying taxes on that income (withdrawn from retirement accounts).

Even if I have to sell some stocks to live on, it will not bother me that much. I would be selling less than what I did before, because my expenses are now lower and we also have SS to rely on. And my stash is much larger now, thanks to the bull market.

Been there, done that. Me worry?

 

[JoeWras]

At my age, I no longer think of "trying" anything new for a few years to get comfortable with it. Weeks or months, maybe.

You probably also don't buy green bananas.

 

[Bamaman]

Just wait until you have to take RMD's--especially if you have no use for the money.

You sell'em, have the taxes withheld and then buy back fewer shares of the same fund.

Something doesn't appear right about it.

 

[Car-Guy]

You probably also don't buy green bananas.

Not there just yet, but I can see that day coming.

 

[youbet]

Just wait until you have to take RMD's--especially if you have no use for the money.

You sell'em, have the taxes withheld and then buy back fewer shares of the same fund.

Something doesn't appear right about it.

Sometimes I feel that way too, but then I remember that I understood the deal when I signed up for IRA and 401k programs and now that it's time to pay the income taxes I postponed decades ago, well, that's what I signed up for. It's kinda silly to act like it's a surprise.

Generally, these retirement programs have been a great deal. The compounding on dollars that would have otherwise been paid in taxes has been great! But, I know what ya mean. It's easy to forget what a great deal it has been and that you knew very specifically when you signed up that the deal was "deferred taxes" not "no taxes."

 

[38Chevy454]

I agree with marko, think of it as you are taking out profits. Your investment value has grown over the years, far beyond what your initial investment amounts are. So just think of it as taking out money that is not your contributions.

 

[kgtest]

I am still in the accumulation phase of my investing career, but the other day when I walked through the graveyard to visit my sister I started reading the dates on some of the headstones. It occurred to me that a lot of those folks didn't get to enjoy it. If I ever have a hard time, I will take a stroll through the graveyard. You can't take it with you, and nothing lasts forever.

 

[tominboise]

Lots of good advice given - thanks much. Just another (mental) hurdle that I will get over. Of course, there isn't an alternative to doing so.

As was mentioned, first world problems - which part of the stash should we spend first?

 

[RobbieB]

I always sell equities, never bonds. The equities grow back like a Dogpatch Ham and the bonds just sit and do nothing (almost, really slow), but they are the 20% rock in my 80-20 AA

 

[Koolau]

Yeah, you'll get over it. Start small and (in days like these) you're stash will still go up - that will help.

Suggestion (not recommendation): Consider converting to Roth's/taking distributions from your qualified within the limits of your tax bracket and ACA, etc. requirements. All this assumes you have a very significant percentage of your funds in qualified vehicles. It could help when RMDs come along. YMMV so be sure you are comfortable/on board with the concept before making a move.

 

[Badger]

I think that's very common. Our nest egg has doubled since we retired (thanks largely to robust markets), even though we're only half in equities, because I am HIGHLY averse to selling off any holdings. Until I started Roth conversions in 2019, I admit I let tax avoidance play too much of a role in my financial actions before and after retiring. We spend far less than any calculator shows we're able as well. It is very hard to save and LBYM for 30-40 years and then change stripes...

+1 We are having a difficult time trying to spend money on something of value to us without just throwing it away. Some things are too confusing or time consuming to fool with like moving at our age when we live in a great neighborhood in a great location at the beach. What we are most interested in are on hold like travel overseas. Our cars are 2 and 3 years old with less than 10k miles each so we are not interested in new or more expensive cars. Medical is taken care of with Medicare and Tricare. There just isn't anything that we need or want that costs more than $100-200. My wife will turn 75 in a few days and I don't have any idea of what to get her and she has no idea either.

It is frustrating to save for retirement and not have the options you were counting on for a fun time. All the sacrifices we made will go to my wife's grown children who will have the fun we are missing due to pandemic. NUTS!


Cheers!

 

[DrRoy]

I had some of those feelings at RE 5 years ago. I got over it, and you can too. Time to sip that scotch.

 

[Flyfish1]

What I find helpful/consoling is to only spend my dividends.

Admittedly, it is a bit of mental gymnastics but you can rationalize it that you're not 'selling your investments', you're just taking the 'profits' they generate. Same amount of shares being held, year in, year out.

You might try that for a few years until you get more comfortable.

Exactly - you could become more of an income investor and just take the dividends and not sell shares. That's part of my plan for retirement.

 

[tominboise]

We do not have enough dividend income coming in (in the taxable brokerage account) to cover our annual budget. Thus the necessity of selling holdings in that account to generate cash. My hope is that appreciation in the market and dividends cover the withdraw rate, or close to it, for the next 8 years.

I will be 70 in 8 years and start drawing SS. The taxable account I am referring to in this thread is about 1/3 of our financial assets (the other 2/3's are TIRA and Roth IRA) and about 17% of our net worth.

 

[plsprius]

I find it helpful to consider the alternative(s).

You could always go back to work instead!

 

[Major Tom]

I find it helpful to consider the alternative(s).

You could always go back to work instead!

My thoughts too. At a few points in the 13 years since I stopped working, I have toyed with the idea of working, perhaps part time, at something I enjoyed. The trouble is that retirement has spoiled me. The idea of meeting any kinds of goals or deadlines, even at something I enjoy doing, just doesn't cut it with me any more. I have turned into a professional layabout. The transformation has been quite shocking!

 

[jollystomper]

The odds are pretty good that your accounts will continue to grow even as you draw them down. That should give you a little comfort .

 

[karen1972]

It also may just take some time to get a strategy that works for you. For me it was hard to just let the cash sit and not be always looking for opportunities to invest it. Eventually I got use to just cutting myself a check every month and the need to constantly invest it went away.

Selling though was not as much of an issue as to me it was always about tax harvesting. Mentally I saw every dollar I sold in the 12% tax bracket as really a 15% instant profit on my LTCG sales. Even if I didn't need it, it could always be re-invested to raise the cost basis..but selling it always makes me feel like I"m winning.

 

[GravitySucks]

My first 8 years of retirement almost all my money came from selling equities in the 401k/IRA and a small bit from the after tax account for tax smoothing.

Last year I started ACA and have rapidly been spending down the aftertax account. By the end of next year it will be close to zero, but I'll be Medicare eligible.

Even though I've been living off sales of equities for coming up on 9 years it is still a bad feeling seeing that one account number dwindle down.

 

[W2R]

Withdrawing money hasn't kept me awake at night. By now, with SS and pension and equal monthly distributions/RMDs from my TSP "G Fund", I don't have to withdraw any more spending money in order to live at my preferred standard of living.

BUT - - most of my investments are in taxable accounts, and what is hard for me is incurring capital gains when selling holdings from these taxable accounts. I am loathe to do this because I dread the tax hit the next year, and haven't been rebalancing as often as planned. Consequently my AA has shifted from 45:55 (equities:fixed) to 50:50 during the past year.

I do not recommend this for others! Rebalance according to your financial plan.

 

[Cobra9777]

We do not have enough dividend income coming in (in the taxable brokerage account) to cover our annual budget. Thus the necessity of selling holdings in that account to generate cash...

Same here, but we are still reinvesting in tax-deferred and Roth. Most years, those reinvestments are roughly equal to our sales in taxable. So in effect, we are just living off the dividend stream from the portfolio as a whole. That helps a little with the inevitable apprehension about selling shares. Although, as others have noted, that apprehension naturally fades with time.

 

[steelyman]

[…] what is hard for me is incurring capital gains when selling holdings from these taxable accounts. I am loathe to do this because I dread the tax hit the next year […]

I’m the same way. My solution, for now anyway, is to sell nothing from taxable accounts and let the dividends accumulate to be used in Roth contributions.

I have one stock with capital losses in taxable and I’m selling it off slowly but that won’t last forever.

 

[RunningBum]

BUT - - most of my investments are in taxable accounts, and what is hard for me is incurring capital gains when selling holdings from these taxable accounts. I am loathe to do this because I dread the tax hit the next year, ...

I have some difficulty with this as well. The way I'm trying to look at this is that I have a certain amount of money that I can spend with little or no taxes. This is my Roth, my bank accounts, CDs, HSA that I have receipts for, etc.

Then I have money I can't access until I pay a tax, which is a lot more than the first money. This includes what's left (unconverted) from my tIRA, and appreciated stock. When I figure out how much I would be able to spend by just paying a small percentage of taxes on it, it's a lot easier to swallow the taxes, even if some of them do slip me into a higher bracket or IRMAA level or whatever.

 

[W2R]

Withdrawing money hasn't kept me awake at night. By now, with SS and pension and equal monthly distributions/RMDs from my TSP "G Fund", I don't have to withdraw any more spending money in order to live at my preferred standard of living.

BUT - - most of my investments are in taxable accounts, and what is hard for me is incurring capital gains when selling holdings from these taxable accounts. I am loathe to do this because I dread the tax hit the next year, and haven't been rebalancing as often as planned. Consequently my AA has shifted from 45:55 (equities:fixed) to 50:50 during the past year.

I do not recommend this for others! Rebalance according to your financial plan.

I’m the same way. My solution, for now anyway, is to sell nothing from taxable accounts and let the dividends accumulate to be used in Roth contributions.

I have one stock with capital losses in taxable and I’m selling it off slowly but that won’t last forever.

I have some difficulty with this as well. The way I'm trying to look at this is that I have a certain amount of money that I can spend with little or no taxes. This is my Roth, my bank accounts, CDs, HSA that I have receipts for, etc.

Then I have money I can't access until I pay a tax, which is a lot more than the first money. This includes what's left (unconverted) from my tIRA, and appreciated stock. When I figure out how much I would be able to spend by just paying a small percentage of taxes on it, it's a lot easier to swallow the taxes, even if some of them do slip me into a higher bracket or IRMAA level or whatever.

Thanks, Steelyman and RunningBum! I am surprised (but relieved) to see that I'm not the only one dealing with this dilemma. I feel so guilty when I don't follow my written financial plan because I know that refusing to rebalance is not the ideal way to manage my portfolio. I keep thinking that perhaps the market will drop like it did in 2008, and rebalance my portfolio without me having to sell anything. Of course, perhaps not, too.