How long can you go without selling stocks?
Posted on April 4, 2025
I had coffee with my friend, Steve, on Wednesday. He said, “You’re going to have to talk to Jo Ann (his wife). She thinks the stock market is going to hell. You’ll have to reassure her.” I said, “Maybe we should wait six months.”
My “calculation year” – the 12-month period I use to recalculate our Safe Spending Amount (SSA, Chapter 2, Nest Egg Care) runs December 1 to November 30. December was a down month; the first three months have no been good. I’m traveling this week end: I write this post early on Thursday morning. This week looks to be very ugly.
I calm my fearful, emotional brain from the risk of stock market declines by adding up that that I can – basically – wait more than three years before I actually have to sell stocks. Bonds are our insurance when we don’t want to sell stocks. When stocks crater, we sidestep the hole in front of us by selling bonds disportionately or solely. We give stocks time to recover. Three years is a lot of time for stocks to recover. You should do the same addition.
== The rest of 2025 ==
My practice is to sell securities to get the amount we plan to spend for the upcoming year into money market by mid-December. I then pay that total out in monthly paychecks on the 20th of each month. We’ve been spending less than our monthly “paychecks” so far this year. I’ve “banked” one paycheck. We have a big travel bill to pay for a trip at the end of July, though. I don’t think I’ll have any excess cash by the end of November that I can carry over for spending for 2026.
== Three more years? ==
I have very close to three years of spending in bonds. That means I can sell only bonds for our spending for 2026, 2027, and 2028. Those are security sales in December 2025, 2026, and 2027. I’d be forced to sell stocks for our spending in 2029 – December 2028: three years and eight months from now.
== My bonds aren’t in the right place ==
This does not work out perfectly for me, though. I’ll be forced to sell stocks in our taxable brokerage account because I have too little bonds there.
Each year I sell more securities for our spending that I derive from our RMD: I withhold all taxes we pay when I take our RMD. The net from our RMD is about 70% of the total I need for our spending. I get the rest by selling securities in our taxable brokerage account.
If I had a mix of bonds as 70% in IRA accounts and 30% in our taxable brokerage accounts, it would be smooth sailing, but I have just 10% of our bonds in our taxable brokerage account. That won’t be enough for “only bonds” this next December.
I have two options:
1. I can postpone selling stocks then and sell toward the end of 2026 for our spending. (I postponed selling stocks for our spending in 2023, and, thankfully, stocks rebounded during the year.)
2. I could sell more than our RMD – more bonds – such that I could sell less stocks in our taxable account, but I’d be paying a hefty tax bill to do that. I doubt if I pick this alternative.
Conclusion: This year has had a rough start. The effects of high tariffs are unsettling. Returns this week look to be scary bad.
I settle down when I add up how long I can go before I actually have to sell stocks for our spending. It’s over three years. (It was four, but I used our Reserve in for our spending in 2023 and did not replace it.) That gives me some consolation to “just let it play out.”