Investing: Should I sell my shares when I retire?

TL;DR

Selling shares to lock in gains and transitioning into cash at retirement is a significant risk over the long term.

Transcript

g'day and welcome to this week's client question yesterday had a good question from a client of mine who's you know on the process to transitioning into retirement you know probably five seven years away but he was listening to the ABC radio where someone was talking about when you get to retirement and a few shares have done quite well over the ti... Read More

Key Insights

• 🚥 Assessing individual timeframes and investment horizon is crucial before making any decisions about selling shares at retirement.
• 👻 Transitioning to a pension payout allows for a gradual sell-down of assets over several decades, reducing the risk of missing out on potential growth.
• 💄 Timing markets is challenging, which makes it difficult to predict the future performance of investments after retirement.
• 💗 Long-term investments can continue to be fantastic and grow for the next 35 years of retirement.
• 🚥 Transitioning into cash at retirement may not be necessary for individuals with a long investment horizon.
• 🛟 The importance of considering the longevity of retirement, as partners may have different life expectancies.
• 🌍 Superannuation assets should be diversified, including both domestic and international shares.

Questions & Answers

Q: Is it advisable to sell shares and lock in gains at retirement?

Selling shares and transitioning into cash at retirement is not always necessary, especially when there is still a long investment horizon ahead. It may be a significant risk over the long term.

Q: Why is it not recommended to sell everything at retirement and move into cash?

Timing markets is difficult, and there is no guarantee that investments won't continue to grow for the next 35 years of retirement. Gradual sell-down through a pension payout is a more sensible approach.

Q: How does transitioning from the accumulation side of superannuation to a pension work?

Transitioning to a pension involves rolling over superannuation assets and receiving a monthly payout. This allows for a gradual sell-down of assets over a period of 20 to 40 years, rather than a wholesale sell-off.

Q: What are the risks of becoming ultra-conservative at retirement?

By becoming ultra-conservative and locking in gains, there is a risk of missing out on potential growth in investments over the long term. This can impact the sustainability of income during retirement.

Summary & Key Takeaways

• A client asked about the strategy of selling shares and transitioning into cash at retirement.

• The advisor explains that selling shares at retirement and becoming ultra-conservative may not be necessary, considering the long-term investment horizon of 35 years of retirement.

• Instead of a wholesale sell-down, the advisor suggests gradually transitioning from the accumulation side of superannuation to a pension, which pays out a monthly amount over several decades.