Tips for Retirees with Long-Held Stocks

Many retirees own stock they bought decades ago but are reluctant to sell it because of the capital gains taxes that will be due. So what should you do with long-held stock?

Before taking any action, you probably want to think about why you hold the stock in the first place.
If your goal is to leave money to your heirs, having a stock-heavy portfolio – which you probably have, due to appreciation – may not be a bad idea, because your portfolio can potentially grow more than it would if you invested more in bonds, and you have some time to weather any market fluctuations that might occur.

On the other hand, if your goal is to generate income for yourself, it’s important to have a diversified portfolio of stocks and bonds.

While diversification can’t protect you from a loss, it can help you better weather the ups and downs of the market. So you may want to consider eliminating some stocks.

One option is to use highly appreciated stocks to fund a charitable trust or gift annuity.

You’ll get an income each year and a tax deduction that could be worth half the market value of the gift.

Note: This article is not intended to provide tax or legal advice and should not be relied upon as such. It is a summary of an understanding and interpretation of some of the current laws and regulations and is not exhaustive. Investors should consult their legal or tax advisor for advice and information concerning their particular circumstances.