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, there are financial and emotional implications to selling assets that can be detrimental to 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.at RBC Wealth Management. “How does this fit into what you're trying to accomplish?” See why it may not make sense to get rid of the following four assets in retirement.
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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 upon passing 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 appreciated value of the asset.
For retirees who prefer to gift today and want to use an appreciated stock to do so, McGrath says they can avoid income taxes by using either the annual gift exclusion or the lifetime gift exclusion. For 2025, that’s $19,000 and $13.99 million, respectively. For 2026, it is $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 just want 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 taking advantage of tax-loss harvesting.
Tax loss harvesting occurs when you offset gains with losses in investments to reduce your capital gains exposure. By pairing a winning and losing stock, there won’t be any gains subject to the capital gains tax.
You can use up to $3,000 to offset income per year with tax loss harvesting. Losses beyond that can be used 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. Real estate property
Whether upsizing or downsizing, many retirees sell their homes in retirement. Moreover, they get rid of 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 on the sale of your house.
-You could have extra expenses in your new location.
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 are lonely or isolated.
Selling It Anyway
If you are bent on selling your home in retirement and stand to make a profit, to minimize the tax hit, take advantage of the capital gains exclusion. It lets you exclude up to $250,000 of the profit of 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.
While the assets may be going 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 is going to fault you for selling the RV that has become a lawn decoration, but don’t use the proceeds from the sale 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 have 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.
Keep emotions out of it
To sell or not to sell ultimately comes down to your goals in retirement. 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: determining what stays and goes isn’t cut and dry and shouldn’t be made in haste.
“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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