Sell These 5 Things BEFORE You Retire (For Peace Of Mind)

Not sure what to sell before retirement? Many retirees carry unnecessary baggage into retirement. While things like old annuities or other large purchases may have once seemed like smart investments, they now create financial stress, higher costs, and unnecessary complexity.

Why Do People Keep Things They Don’t Need?

It happens to the best of us. Every time I go over to my parents’ house, my mom calmly tries to nudge me to take some of my old stuff home. The truth is, no one really wants more stuff. But we all hold onto it anyway.

Deep down, we’re always trying to balance holding onto memories with wanting a little more mental clarity. So the stuff just sits there. Not wanted, but not forgotten. And honestly, retirement planning isn’t that different. Let’s walk through a few things you should seriously consider selling before retirement.

SEE ALSO: 3 Big Risks When You Are Retiring With a Pension

What to Sell Before Retirement? Get Rid of These 5 Things

Some of what we’re about to talk about might be hard to hear. But if you can get ahead of it now, you won’t have to deal with it later when decisions feel rushed or forced.

1. Sell Your House

I know there’s a lot of advice out there about paying off your mortgage before retirement. It’s been the go-to for years. But here’s the question. What are you actually getting for it?  

In some cases, you’re paying off a low-interest mortgage just to enter retirement with less flexibility. You’ve got all this equity sitting in your home, but you may never actually use it. If your kids are out of the house, chances are you’re only using a portion of the space. But you’re still paying to maintain the whole house. If you have a pool, you’re probably paying for regular maintenance. All of that adds up.

According to HomeGuide, the national average is about 2.5% of home values. So, if you live in a $1.5 million home, your annual maintenance costs could be around $37,500. For some people, that’s their entire Social Security check going toward the house. Selling your home isn’t just a financial decision. It’s an emotional one. It forces you to decide whether you’re holding onto the past or making space for the future. But if you can get past that, it can open the door to both mental and financial freedom.

2. Sell Your Extra Car

Next up is your car. Or more specifically, your extra car or expensive car. The math here is pretty straightforward. Fewer cars mean lower insurance, maintenance, and overall costs. And if you’re downsizing your home, you may not even have space for multiple vehicles.

When you’re working, a $1,500 monthly car payment might not feel like a big deal. In retirement, that’s $18,000 a year. That’s a meaningful amount of money. That could be two first-class round-trip tickets to Rome. Or two years of helping with a grandchild’s college expenses. The point is, retirement gives you the chance to decide what matters most. If the car still fits your priorities, that’s fine. But if it doesn’t, it may be one of the easiest places to free up cash flow.

3. Certain Investments That No Longer Serve You

We’re going to look at three types of investments that you may want to reconsider heading into retirement.

Review Your Insurance Policies

A lot of people end up with whole life policies for one simple reason. Guilt. At some point, you had a spouse, young kids, a mortgage, and a lot of earning years ahead of you. You needed protection. So you bought the policy. Then, over time, you realized you needed more coverage, so you added a term policy on top of it.

Fast forward 20 years. The term policy has expired. The kids are grown. The mortgage is smaller or gone. And now you’re left with a whole life policy that has some cash value and a death benefit you may not even need anymore.

So it’s worth asking a simple question. What purpose is this still serving?

Originally, the goal was to replace income and protect your family during your working years. If that need is gone, the policy may just be adding cost and complexity to your life. That doesn’t mean you should cancel anything right away. It’s always smart to have a fiduciary review it first.

But in many cases, there are ways to simplify. You may be able to convert the policy to a reduced paid-up version and stop paying premiums altogether. You might give up some of the death benefit, but at this stage, that’s often okay. Simplifying something like this can free up thousands of dollars a year and give you back a whole lot of mental space.

SEE ALSO: 5 Good Reasons Not to Get Long Term Care Insurance

Evaluate Old Annuities

Retirement budget planning can look different for everyone. Another type of investment you may want to sell before retirement is old annuities. If you have one and you’re not exactly sure what it does, you’re not alone. A lot of people bought annuities years ago and have just been receiving statements ever since without really revisiting them. In many cases, these products come with a surrender period of 5 to 7 years. If that period has passed, you may be able to get out without penalties.

If the annuity is inside a qualified account like an IRA or Roth IRA, there may not be tax implications when moving it into a retirement account. That said, this isn’t something you want to do mindlessly. There are situations where an annuity might still make sense, especially if it provides a strong lifetime income. But if it was purchased in a low-interest-rate environment and the payout is minimal, it may not be doing much for you anymore. 

Tip: If you have an annuity, it’s worth having a fiduciary review it before you make any decisions. Before making any changes, be sure to review the potential tax implications to fully understand the impact.

Concentrated Stock Positions

The last investment to take a hard look at is any concentrated stock position. This usually happens in one of two ways. You’ve been buying a stock over the years, and it’s turned into your biggest winner. Or you’ve accumulated shares through compensation at work. Either way, you can end up with a large portion of your net worth tied up in one company. And that’s where the risk comes in. Retiring with too much money in a single stock isn’t really an investment strategy. It’s a bet. A common guideline is to keep no more than about 10% of your liquid net worth in any one stock.

And there’s a reason for that. According to JP Morgan’s study on concentrated stock position risk, nearly half of all public companies eventually crater 70% or more and never make it back to their previous high. Only a small percentage of stocks end up carrying the market. Those aren’t the kind of odds you want to rely on in retirement. Because if that one stock takes a hit, it doesn’t just impact your portfolio. It can disrupt your peace of mind. And in retirement, that matters just as much as your financial outcome.

4. “Toys” You Don’t Use Anymore

“Toys” are anything you bought at one point because you thought it would enhance your lifestyle. At the time, it probably felt like a great idea. But over time, it’s become something that costs more than it benefits you. So when we talk about simplifying your life in retirement and reducing stress, getting rid of things that cost more than they benefit can go a long way.

A good example of this is RVs. Following the pandemic, RV sales hit an all-time high. But since then, those numbers have dropped significantly. That usually means people aren’t using them as much as they expected. But they’re still paying for them. Or they’re holding onto something that could be turned into a valuable asset. If you’re not using it, it may be worth selling. 

Another example is timeshares. They seemed like a good idea at the time. The plan was to go on the same trip every year or trade those weeks for something different. But for a lot of people, it didn’t work out that way. Now it’s something you’re still paying for. Historically, timeshare fees have gone up by about 3% to 5% every year. That’s just unnecessary baggage.

5. Rental Properties or Side Gigs

Last, and for some reason, the most controversial, is your rental property or any side gig in general. Here’s a simple way to think about it. If it’s a hobby and it brings you joy, purpose, and meaning, keep it.

If it causes stress, anxiety, or takes time away from things you’d rather be doing, it may be time to let it go. When you build your financial plan, it’s important to identify what actually matters to you. Is it spending time with your grandchildren? Traveling? Focusing on hobbies? Or just having more freedom with your time? The goal isn’t just to have enough for retirement. It’s to have enough freedom to enjoy it.

At the end of the day, this isn’t just about what you sell. It’s about getting clear on what you actually want your life to look like in retirement. Once that’s clear, the decisions become a lot easier.

A Better Way to Approach Retirement

At Paces Ferry Wealth Advisors, we help people take a step back and align their finances with what matters most to them. Schedule a conversation with our team. 

Paces Ferry Wealth Advisors, LLC is a registered investment advisor with the U.S. Securities and Exchange Commission (“SEC”). This material is intended for informational purposes only. It should not be construed as legal or tax advice and is not intended to replace the advice of a qualified attorney or tax advisor.