All retirees end up asking themselves if they should cash in their chips and make a smooth, profitable exit from the stocks game. Having nurtured their portfolios through the years, they sometimes feel uneasy about selling their stock assets. After all, a lot of time has gone by, watching them, believing in them, having them generating income, even if poor at times. Many retirees know that they could generate some extra cushion by unloading their stocks, but they just can’t seem to fathom the act.
It’s important to remember why you started accumulating stocks in the first place. In most cases, it was simply a matter of developing a tangible financial portfolio; something that you created to make life better for the future of you and your loved ones. Well, have your stocks done that? Maybe you took a heavy hit back in 2008. Maybe you’re just recovering – and stock markets are doing just about as good as you could hope for right now. Maybe it is time time to cash them in. You can try the superannuation calculator over at Suncorp, if you need a hand figuring out how much you need to retire.
Should you sell your stocks now that you’re a retiree?
That is a question only for you and your financial advisers. However, there are some facts that might help you make the decision. Here they are:
- You are retired, and that means that you don’t need a bunch of headaches. The stock market, although performing very well in most cases lately, has loads of inherent headaches to offer. In order to thrive in the markets, you need plenty of time to ride the waves; to experience and benefit from the downs and ups that are imminent.
- Even if you decide to sell your stocks, you don’t have to sell all of them. Rebalance your stock investment equation to better fit your new retired lifestyle. Consider holding on to long-running solid performers – and let the risky, chaotic ones go.
- Many experts recommend rebalancing your stock portfolio on a yearly basis to optimize risk adjusted returns. Think about whether or not your core income necessities are being met, and by how much, by vehicles like SSI, annuities, bonds, pensions and other draw-down strategies.
- One option you have to replace your involvement in the stock markets is to reinvest in TIPS (treasury inflation protected securities). Like income annuities and zero-coupon bonds, these are safer, slower, less risky – just about the retiree speed, if you will.
The best advice as to whether to sell or hold on to your stocks now that you’re retired is to take it slow. If you decide to sell them, then do so gradually. Unload the most risky ones first, and then proceed to sell the rest at optimal times, if possible. Don’t be in a rush. And if you happen to be relatively loaded with assets, then maybe you could put some of your best, most solid performing stocks in your will – just to keep them in the family so to speak.