I’m getting ready to retire next year and want to sell some stocks and buy bonds – what’s the smartest way to do this?

A couple in their mid-50s is planning for retirement and wants to know the best approach for selling stocks. They have a $5.2 million net worth and also receive $65,000 per year through a pension. After earning and investing money into stocks for several years, the Redditor is ready to diversify their portfolio and swap some of their stocks for bonds.

However, selling stocks comes with taxes, and the Redditor also has several accounts. Redditors jumped into the comments to share their thoughts on how to make the pivot from stocks to bonds.

The Redditor’s Accounts

The Redditor has their $5.2 million spread across the following accounts:

• Brokerage account: $1.5 million
• Roth retirement account: $500,000
• Traditional retirement account: $3 million before taxes

The couple has 80% in stocks, 15% in bonds, and 5% in a money market. Their equity is mostly allocated toward 6-7 individual tech stocks. The Redditor is aiming for a 60/40 allocation as soon as possible.

Gradually Sell Out Of The Equity Positions

Immediately selling all of the individual tech stocks will result in a big tax hit, so one commenter suggested gradually selling off these assets. Luckily, these are long-term capital gains, so the original poster will face a lower tax bill.

As the investor sells off their positions, they can put the extra cash into bonds. However, they can speed up the process to a 60/40 allocation by selling stocks in their retirement accounts. You won’t have any immediate tax impact if you sell stocks in your Roth IRA or traditional IRA.

You only pay taxes on traditional IRAs when you withdraw funds, while you won’t have to contend with any taxes for the money that’s in a Roth IRA.

Paying A Financial Advisor Is A Small Investment

The original poster questioned if it was a good idea to work with a financial advisor instead of doing the work themselves. While each person is different, the Redditor has enough cash to afford a financial advisor. Not only that, but there’s also a lot of cash at stake if the Redditor makes bad decisions with their retirement strategy.

“If you got $5.1 million and are not sure what you’re doing, pay an advisor,” one commenter suggested. However, some financial advisors have high fees. You will have to compare several options before deciding which one is right for you. Narrowing your selection to fiduciaries ensures that you work with an advisor who is guaranteed to serve your best interest.