Usually, retirement planning is all about what you need to save up. But what if that’s only half of it? We’ve been guiding successful expats and high-net-worth international families for 32 years during more than 68,000 hours. We’ve seen a pattern: the happiest and most financially secure retirees don’t just save more money; they also make their lives easier in smart ways.
The first step to a joyful retirement is figuring out what you should sell or give away before you stop working. Real success in retirement comes from optimising your portfolio rather than adding to it all the time. This change of viewpoint might free up money, time, and energy that are currently locked up in possessions that don’t help you reach your future goals.
Expat Wealth At Work will show you the five most important things you need to sell or give away before you retire, why timing these decisions is important, and how to figure out which assets are helping you reach your retirement goals and which ones are quietly holding you back.
Before you retire, sell these five important things
The path to financial freedom often requires letting go of certain possessions. Finding the assets that are quietly depleting your resources becomes crucial as retirement draws near.
1. Big Houses and Second Homes
Even if your family home may be your most valued asset, you still have to pay property taxes, insurance, and upkeep costs on it. Not only does downsizing give you instant cash, but it also cuts down on regular costs that might slowly eat away at your retirement savings.
2. More cars
Those extra automobiles in your driveway cost you hundreds of euros a year in insurance, maintenance, and depreciation. After a simple 90-day test, many retirees find that one car fits all of their transportation needs.
3. Hobbies and collections that cost a lot
These things, like gym equipment and art collections, typically sit around collecting dust even if they are worth a lot. Selling these things doesn’t erase memories; it just makes them useful for more important experiences.
4. Business Risks and Small Businesses
Having a side business or doing consultancy work might seem like a beneficial idea, but it often causes more stress than happiness. Think about whether these responsibilities fit with your goal for retirement or just hold you back.
5. Ignore technology and electronic devices
Old laptops, phones, and other equipment can occupy space and potentially contain private information. Furthermore, recycling these things the right way is beneficial for the environment.
Why it matters to sell early
Timing can be the difference between a successful retirement and a disastrous one. One of the largest risks in retirement is the sequence of returns risk, which you can avoid by making early selling decisions. During the first five years of your retirement, when the market goes down, the harm to your money in this “danger zone” can last forever.
Think about this scary fact: if your portfolio declines only 15% in the first year of retirement and you take out 3.3%, your chances of running out of money in 30 years go up six times. This happens because you have to sell more investments at lower prices, which means you have fewer assets to recoup when the markets go back up.
Furthermore, selling assets before you retire can often help you save money on taxes. You can plan your sales such that they happen during years when your income is smaller. This could reduce your capital gains tax bill. Thereafter, you get important liquidity, which means you can get to your money without having to sell things at difficult times.
In fact, putting more money into cash before you retire gives you more options when the market is tough. Many retirees find that property, even while it is worth a lot, is not liquid enough for everyday costs. “You can’t sell a brick when you need cash.”
So, making early selling decisions lets you spread your risk among different types of investments, which is better for diversification. This method is especially helpful for people who have a lot of money locked up in property since it lowers the concentration risk that comes with having too much wealth wrapped up in one asset class.
How to Choose What to Give Up
To decide which assets to give up, be honest with yourself about your feelings and clear about your finances. This process is hard for a lot of retirees because their things mean more to them than money—they symbolise who they are, their achievements, and their favourite memories.
Initially, consider this fundamental question: “Would anyone be distressed if you departed tomorrow?” This test shows if your business or property makes people dependent or independent. Furthermore, look at each item via three important lenses:
Start by assessing how well your goals and lifestyle align. Does keeping this asset make you happy, or has it become a burden? Studies reveal that many retirees keep things they only use a few weeks a year and pay thousands of dollars in upkeep expenditures.
Next, please determine your actual earnings. When you rent out a property, don’t simply look at the money you make. Take out taxes, insurance, and maintenance expenses. A property that looks like it’s breaking even could actually be losing money.
Finally, contemplate how taxes will affect you. When you sell something, it might have a big effect on how much you owe in taxes. You might pay lower income taxes and possibly lower capital gains taxes when you sell assets after you retire.
Check to see if your investments are doing what you thought they would. You can make more money in retirement by selling stocks or funds that aren’t doing well and putting the money into better ones. Furthermore, think about concentration risk, which is when too much of your wealth is tied up in employer stock or a single asset class.
In the end, you should preserve the assets that bring in steady income or really help you reach your retirement goals without causing worry or costing you money.
Final Thoughts
To plan for retirement, you need to change the way you think. Most advisors simply talk about accumulation, but this is only half the issue. After decades of helping customers get ready for retirement, the proof is still clear: prudent divestment comes before real financial freedom.
Think of getting ready for retirement as a way to get rid of your financial mess. Each asset you sell before retirement day gives you more freedom, lowers your ongoing costs, and may even lower your tax bill. This method is especially important during the first five years of retirement, when market swings might hurt your long-term security for good.
Keep in mind that every item has both obvious and hidden expenses. Your vacation home may have wonderful memories, but it costs thousands to maintain while it’s empty most of the year. In the same way, commercial interests that used to define your professional identity could become burdens instead of sources of happiness.
So, begin the process of evaluating your assets at least five years before you want to retire. Be honest about whether each important item still fits your future goals or just reminds you of your past. The idea isn’t to get rid of everything that matters but to carefully decide which things you want to bring with you to this new chapter of your life.
Most people think that the happiest retirees are the ones who have the most money, but that’s not true. The happiest retirees are the ones who carefully streamlined their finances while keeping what really counts. What you choose to let go of deliberately is more important to your retirement success than what you collect along the way.
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