6 Assets You Should Keep in Retirement (Even If You Need the Cash)
Sitting on little gold mines? It's natural to want to cash out when you retire. Here’s why you may not want to.
Sitting on shares of Nvidia Corp. from before the chipmaker got into AI and its stock gained 35,000%? Have a cabin in the mountains that’s appreciated in value and then some? It’s only natural to want to cash out and sell those assets in retirement, even if you don’t need the cash.
But before you do, it pays to take a moment and think about what selling them gets you. Whether it’s an appreciated stock or a piece of real estate, selling assets has financial and emotional implications that can hurt your retirement.
"One big component of this comes down to looking at those intended and unintended consequences," says Tom Evans, wealth strategist at RBC Wealth Management. "How does this fit into what you're trying to accomplish?"
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From stocks to insurance, see why it may not make sense to get rid of the following six assets in retirement.
1. An appreciated stock
If you own shares of these stocks or any others that have doubled, tripled, or even quadrupled over the years, you may think cashing out is in order.
Not a good idea, says Tim McGrath, a managing partner at Riverpoint Wealth Management, especially if you have heirs you plan to leave assets to or you don’t want to pay a lot of taxes. That’s because if you sell the stock, you may have to pay capital gains tax on it come tax time.
"The general rule is if someone has assets in a non-qualified account and they will get a step-up in basis upon passing, I’m hesitant to have them sell those assets," he says.
A step-up in basis occurs when the asset gets revalued at the fair market value on the date of the owner’s death. That enables the beneficiary to avoid capital gains tax on the asset's appreciated value.
For retirees who prefer to gift today and want to use appreciated stock, McGrath says they can avoid income taxes by using either the annual gift exclusion or the lifetime gift exclusion. For 2026, those amounts are $19,000 and $15 million, respectively.
"Selling the asset isn’t just a financial transaction. It has tax and legal ramifications that could affect someone for generations," said McGrath.
Selling It Anyway
If you aren’t planning to leave the stock to heirs and would like the money, be prepared to pay income tax on the balance. To minimize the tax hit, consider selling the stock in lower-tax years or using tax-loss harvesting.
Tax-loss harvesting is a strategy of offsetting investment gains with losses to reduce your capital gains exposure. By pairing a winning and a losing stock, there won’t be any gains subject to the capital gains tax.
You can use up to $3,000 to offset annual income with tax-loss harvesting. You can use losses beyond that in future years. Be aware of the "wash" rule: You can’t repurchase the same or a similar security within thirty days before or after.
2. Selling your home or vacation home
Whether upsizing or downsizing, many retirees sell their homes. Moreover, they may sell a second home — a cabin on the lake or a condo on the beach — to live a more burden-free life or to cash out. If you are thinking of joining them, consider the cons first:
- You have to pay selling costs, which can be 6% to 10% of the sale price.
- You give up any potential future appreciation.
- You could face capital gains taxes when you sell your house.
- You could have extra expenses in your new location.
- You may give up a low mortgage rate.
Beyond the financial impact of selling a home in retirement, there is also the potential emotional impact if you hate your new location, lose your support network, or feel lonely or isolated.
Selling It Anyway
If you are determined to sell your home in retirement and stand to make a profit, take advantage of the capital gains exclusion to minimize the tax hit. It lets you exclude up to $250,000 of the profit from the sale of your primary home for single filers and $500,000 for married couples filing jointly. To qualify, the home has to have been your primary residence for at least two of the past five years before the sale.
3. Bucket list items
Ask retirees, and many will likely admit to spending money on RVs or sailboats — their dream "bucket list" assets — only to have them gather dust instead of miles.
Even if the assets go unused, don’t sell them and give up on your retirement dream too quickly, especially if you are healthy enough to pursue it and can afford it.
That RV or boat not only gives you a flexible travel option and stops you from selling a depreciating asset for less than you purchased it for, but there was a reason you bought it in the first place — it was on your bucket list!
Selling It Anyway
Nobody will fault you for selling the RV that has become a lawn decoration, but don’t use the proceeds to bolster your savings. Instead, use the money for something that will bring your family joy.
"How are those assets benefiting the family?" says Evans. "If there isn’t a benefit, what can those assets be used for to bring enjoyment or more financial stability to the family?"
4. Old life insurance policy
Some cash-strapped retirees or those sick of paying premiums will sell their life insurance policies to a life settlement company. In theory, it seems like a great idea. A company takes over your payments, and you get cash in return. But there are a lot of downsides that make it a last resort option, says McGrath.
For starters, expect a cash offer that is anywhere from 5% to 80% less than the value of the policy’s death benefit. Plus, your beneficiaries won’t receive anything when you die, which is the whole purpose of setting up the policy in the first place.
The money you receive from selling the policy is subject to taxes, and the transactions may carry high fees, which could further lower your payout.
The money could impact your ability to get other government benefits, such as Medicaid, or, for high earners, result in a Medicare surcharge known as IRMAA.
Selling It Anyway
If you understand the cons and still want to sell your life insurance policy, it's important to work with a licensed professional and get several quotes. You can sell your policy directly to a life settlement provider or through a broker.
With a broker, you pay a commission, but you get offers from multiple life settlement companies. When you sell your policy directly, you can avoid the commission, but you may receive a lower offer.
5. Cashing out a Roth IRA or Roth 401(k)
Some retirees who want to spend a substantial amount may consider tapping their Roth IRA or Roth 401(k) first. After all, withdrawals from a Roth IRA are tax-free; why not opt for the cheapest option first, right?
While it may seem tempting early in retirement, doing so removes an account that can grow and compound completely tax-free. Unlike a traditional IRA or 401(k), Roth IRAs and Roth 401(k)s have no Required Minimum Distributions (RMDs) during your lifetime.
That means the money can sit in the account, entirely untouched, growing tax-free for decades. If you plan to leave money to your heirs, a Roth account is among the best assets to pass down, because every dollar your heirs withdraw is also tax-free.
Selling It Anyway
If you must tap into your Roth account, try to preserve the earnings. Under IRS rules, you can always withdraw your original contributions from a Roth IRA at any time, for any reason, tax- and penalty-free. If you limit withdrawals to your original contributions and leave investment growth to keep compounding, you protect the account's long-term tax shelter.
Before you tap that Roth 401(k), remember that non-qualified withdrawals from a Roth 401(k) are subject to the pro-rata rule. That means that every withdrawal is a proportional mix of tax-free contributions and taxable earnings. You'll also need to ensure you understand the potential 10% penalty on Roth 401(k) withdrawals.
6. An income-producing annuity
Many retirees buy income-producing annuities for peace of mind. After all, they guarantee a steady stream of cash for life. But some later feel buyer's remorse or, tempted by rising interest rates, surrender their annuities early.
Sure, they can cash out the remaining balance or roll it into another investment, but they will face steep surrender charges. Plus, any gains from cashing out the annuity are treated as ordinary income, which could create a tax event.
Not to mention, they give up a guaranteed stream of income for life. For all those reasons, income-producing annuities are an asset financial advisors want retirees to hold on to.
Selling it anyway
If you want to sell anyway and don't mind paying the penalty, first weigh whether it's worth giving up longevity protection for cash right now. If you do decide to sell the annuity, you have options:
If the annuity is already paying out income, you can sell future payments to a third-party company. Typically, you receive 60% to 80% of your annuity's cash value, according to Annuity.org. You can sell a portion or all of your annuity, depending on how much cash you need.
If the annuity is still in the accumulation stage, you can surrender it to the insurance company, but you will pay a steep surrender fee. The older the contract, the lower the fees.
Before selling the annuity, work with a reputable financial adviser to ensure you pay the lowest surrender fees and spread out withdrawals to limit the potential tax hit.
Keep emotions out of it
Deciding whether to sell or hold an asset ultimately comes down to your retirement goals. Whether it's your home or a life insurance policy, how you want to live and what you want to leave behind will determine what assets you keep and which ones you let go of.
Either way, one thing is for sure: deciding what stays and what goes isn’t cut and dry and shouldn’t be rushed.
"There’s an emotional process to getting rid of things; it’s not just about price," says McGrath. "We need to make decisions we’ll be happy with."
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