It's (mentally) hard to sell my investments

[pb4uski]

I usually keep about a year's worth of expenses in an online savings account and a monthly transfer from the online savings account to the checking account that we use to pay our bills (my monthy "paycheck") and the online savings account gets replenished annually as part of my rebalancing.

So I never really sell equities to provide spending money... any selling was just annually as part of rebalancing so I never had to deal with the issue of "selling" invetmentd for spending money... to me it was just a natural past of my rebalancing... so there was no psychological hurdle to be jumped over.

 

[Phroig]

I’m not retired yet, but I expect to have a hard time with this too. I wonder if it helps to ease into the spending mindset in your final working years, by not being quite as frugal as you were.

 

[RobbieB]

I would think so. And if you've been doing the saving/investing thing from the start, shouldn't be a problem.

 

[Koolau]

+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!

I hear you on all these points. We always wanted "value for money" and it's still a bit difficult to just "consume." I've mentioned before that we could afford 1st class air but can't seem to pull the trigger when the time comes.

We try to get each other "consumables" for Christmas/birthdays to avoid further accumulation but NEITHER of us needs any more candy!

We KNOW that when we die, all the keepsakes will just be shoveled into a dumpster. That bothers us a bit, but what's to be done?

We too had bigger plans for FIRE than we have accomplished (more travel, more "adventures" etc.) But life sometimes interferes with plans.

At some point, you just stop worrying about such things and get on with life. YMMV

 

[JDARNELL]

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

At least you have a plan. I can't seem to get to a rebalance plan. Or a withdrawal plan for that matter. I too let the tax tail wag the dog.

 

[W2R]

At least you have a plan. I can't seem to get to a rebalance plan. Or a withdrawal plan for that matter. I too let the tax tail wag the dog.

Thanks! It's nice to know that others are having trouble with this too.

Before I retired, I read somewhere that retirees should literally write down their financial plan and treat it as though it was written in stone.

For me, that worked for a decade but not after that. Oh well.

 

[tominboise]

Speaking of rebalancing, I should be moving around 6% of our TIRA $$ from stocks to bonds. I have been hesitant to do so due to bond performance, etc. But should I hold my nose and move forward? This would change our AA in the TIRA's from 60/40 to 54/46.

 

[FREE866]

Totally relate to the OP's mindset. I sell a few times a year ETFs that I know will be , at the very least, substantially higher 10-20-30 years down the road.

 

[ProspectiveBum]

I’m not retired, but I can relate to this. Back in 2016, feeling that I was behind on funding my kids’ college funds, I pushed a big chunk of my available funds into AAPL, which was undervalued at the time. The stock is up almost 7x since then, more than covering our expected contribution to both kids’ expenses. DD will start college in the fall, and we have 2 years of the costs covered in other accounts (529, etc.). Logically, I should cash out at least the last 2 years of her costs from our brokerage account, but I like AAPL’s prospects over the next couple of years, and am finding it difficult to pull the trigger.

I suppose it’s simple greed/FOMO, but a real struggle either way. I think I’d have less of an issue selling an index fund.

 

[Graybeard]

I can relate to the OP but my situation is very different. I've read so many of these threads here and at BH so I realize that this is a common problem for people who have been frugal all their lives and accumulated wealth.

I've been retired almost 15 years and my net worth has doubled with a 50/50 asset allocation. I only took 1 distribution and that was for $21k to pay off my mortgage, I had the rest in cash. If not for that, I have never spent one penny of investments in retirement accounts or taxable accounts. For over 14 years I have actually banked money most months (9 out of 12) that I don't spend because I don't need all I have coming in monthly. Not a bad situation, just saving like I did all those years working.

I am now faced with having to take my 1st RMD this year. I sure don't need it and will just put the balance after taxes into my taxable account. My income this year will literally double due to the RMD. I understand tax deferred but it still bugs me I have to "spend" some of it when I don't need it. I try to think of something to spend it on, but as strange as this may sound, there is nothing I want or need. I realize this isn't a bad situation but I clearly am an outlier in a country of people who are in debt and can't make ends meet.

 

[RunningBum]

I am now faced with having to take my 1st RMD this year. I sure don't need it and will just put the balance after taxes into my taxable account. My income this year will literally double due to the RMD. I understand tax deferred but it still bugs me I have to "spend" some of it when I don't need it. I try to think of something to spend it on, but as strange as this may sound, there is nothing I want or need. I realize this isn't a bad situation but I clearly am an outlier in a country of people who are in debt and can't make ends meet.

The purpose of RMDs is not to force you to spend the money, but to start making you pay taxes. You don't get to defer the income forever. RMDs have always been a part of IRAs and 401Ks, so this should not be a surprise to you.

 

[RobbieB]

Nobody says you have to spend it. Save it all for a rainy day.

 

[VanWinkle]

Speaking of rebalancing, I should be moving around 6% of our TIRA $$ from stocks to bonds. I have been hesitant to do so due to bond performance, etc. But should I hold my nose and move forward? This would change our AA in the TIRA's from 60/40 to 54/46.

When stocks have outperformed and bonds have under performed is the perfect scenario for re-balancing. Remember that your allocation is the most important thing to control risk.

Best to you,

VW

 

[Graybeard]

The purpose of RMDs is not to force you to spend the money, but to start making you pay taxes. You don't get to defer the income forever. RMDs have always been a part of IRAs and 401Ks, so this should not be a surprise to you.

I know that. I knew it 35 years ago when I first started to contribute to my 401k. My perspective is I now need/am required to reduce the balance when if the age was say 75 I'd have 3 more years to not touch it. This is not a surprise, I have been counting this down for a few years, now it is here.

 

[RobbieB]

Lobby your rep to raise the age to 75.

 

[KCGeezer]

Speaking of rebalancing, I should be moving around 6% of our TIRA $$ from stocks to bonds. I have been hesitant to do so due to bond performance, etc. But should I hold my nose and move forward? This would change our AA in the TIRA's from 60/40 to 54/46.

Or you could put that 6% in bitcoin! It could do better or worse than bonds at this point, who knows?

 

[RobbieB]

I just sold a hundred and sixty grand of equities. It was easy. Just like always -

 

[watchman3135]

We are 61/59 years old and retired in Oct 2020. We have a good budget and are hitting it and are at 100% on all the calculators that I have run, etc.

We are using our after tax brokerage account as our financial engine until we start drawing SS (at age 70) and taking RMD's (at 72). So drawing $$ from our brokerage account requires selling off investments in that account (currently 75/25 AA in that account). We are getting an ACA subsidy, so that requires managing which assets get sold for capital gains management.

ANYWAY, my personal issue is that I've spent the last 30 years or so putting money into those accounts and managing them to grow. Taking money out seems backwards and wrong. I know I put it in there so I could take it out later.

Just trying to rationalize to the inner saver in me.....

I've often here it referred to as the “Decumulation Paradox”. Very common feeling as you say, it feels counterintuitive.

Back in the mid 90's in my early 30's when I was working and planning an early retirement before the acronym FIRE was used, I thought it was as simple as going to any bank in town and opening 6% long term safe CD's which weren't that hard to find. The thought of $60K annual income at the time with FIDC made me feel safe and secure. The only complication in my mind then was spreading out the CD's among various banks for the then $125k FDIC limit. Of course that's spread out quite a few.

As I approached ER in 2019, I like others had to adapt to current times of now 0.50% 5 year cd's rates, I quickly realized spending down principle is the only realistic scenario. It's a constant reminder of what's on every prospectus "Past Performance Is No Guarantee of Future Results".

 

[arch57]

Someone here once wrote this (sorry, unable to remember who):

"You are no longer in a savings mode
You are now in a slow spend down mode"

I have that written and placed by my desk as a reminder. It helps quite a bit.
After all, what did you save it for but to live in your retirement ?

I went to a retirement seminar as part of our “lunch & learn” series at work about a year before I retired. What stuck out was when the facilitator said “you spent all your working years accumulating money, retirement is the time to spend it”.

 

[arch57]

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

Same here. My strategy has been to look for investments that are at or near a 52 week high and then unload a percentage of them. So far they’ve grown back nicely over the 7 years I’ve been retired. Even in a down market our portfolio will have a couple of decent performers I can pick from.

 

[BubbaChris]

We're less than a year into RE, also balancing our income for ACA PTCs. We began retirement 5-years earlier than planned, so I hadn't been preparing (beyond saving for retirement).

As someone else mentioned, The Retirement Answer Man podcast (Roger Whitney) has great episodes on the mental side of shifting into decumulation mode.

The toughest thing for me so far has been needing to pay attention to our cost basis in the after tax account. We have some holdings where the basis is less than 30% of current value of those funds. I thought it would be more simple to spend-down my after tax account!

That said, we're in the middle of embracing our go-go years and converting almost 10% of our investments into a vacation home. In doing so, I'll be touching/moving/selling from after tax, money market, ROTH, and tIRA accounts. Part of it feels scary, but the other part is amazed that We'll still have more money in those accounts than we did this time last year.

Two things that are helping me sell equities:
1) A 60-year old peer died of cancer this time last year. This isn't our only time seeing someone robbed of opportunities, but it hit close enough to home to justify moving away from Plan A. Tomorrow isn't guaranteed.
2) I spent years in the tech industry where stock options where a major opportunity for maximizing your earnings. I watched colleagues who didn't collect on those opportunities because they were afraid of the taxes due. Stocks went down in value, and their options sometimes became worthless. It taught me to see the importance of selling shares so I could put the money to use (e.g. down payment on a home), or into something less volatile.

Good luck with your adjustments!

Best regards,
Chris

 

[Dick K]

Great Discussion.

I had the same trepidation as many have expressed at transitioning to the decumulation phase. After doing all my own personal finance and investing for 25 years to retire at 50, I decided to hire a wealth managment company. I found one that has the same values and goals as I had, and we decided to bite the tax bullet and transition all of our after tax assets over to their portfolio over two years.

Huge tax bill, but now we just allow them to invest, re-balance, and send us a monthly paycheck with no worries and no hassels. In addition, I have some experts to consult with on any topic - taxes, Roth conversions, ACA, when to take SS, etc. Part of the sell-off of our hugely appreciated FAANG stock when into a donor advised fund, so we took the write-off during the big tax years and have many years of contributions to be able to give without any further complications or tax concerns - love it!

 

[RobbieB]

Long term cap gains are tax favored, don't be afraid to sell.

 

[Koolau]

I just sold a hundred and sixty grand of equities. It was easy. Just like always -

Heh, heh, it just about killed me to sell 60 grand worth recently! But, I'll have to admit, it DOES get easier as you get older. YMMV

 

[Retired Expat]

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.

I do that. Will siphon off some or all of the net income from dividends and interest and move that to checking. Other income from real estate or side hustles goes into checking or MMA too. Haven’t touched investment principal in 9 years now and it has grown handsomely. Don’t expect it will grow much in the near term but income is stable enough…