Planning to convert assets into retirement income?

Some important considerations before you sell off assets

Your retirement income is likely to come from a number of sources, such as your investments and any pension plans you may be entitled to. Depending on your specific needs, you may also look at converting large assets that you own to create an additional source of income.

Throughout your life, you’ve built up assets. Your own personal empire, if you like. These assets include things like your home, perhaps a business or rental property, or other assets such as a vacation property, a boat, your car, or anything of high value that can be sold off for cash.

Liquidating assets

Once you have determined that you want to liquidate some of your assets to fund your retirement, it's wise to take a strategic approach to drawing upon your assets. You can develop your plan of action based on the answers to these questions:

• How much extra income will you need?
• What will you be selling, and when?
• Would it be better to liquidate all at once or over several years?
• How will you invest the proceeds?
• What will be the impact on your family and potential heirs?

A realistic plan, created with professional advice, will ensure that you avoid a "fire-sale" situation, in which you are forced to sell assets below market value. Plan ahead to avoid selling out of desperation.

Don't forget taxes

When thinking about selling off assets, remember to keep tax implications in mind. Any capital gain on your principal residence is likely to be tax-free, courtesy of the principal residence deduction. Qualifying shares of small business corporations may be eligible for an $1.250,000 capital gains exemption (2024 figure). The sale of other assets, however, such as a cottage or rental property, may result in a taxable capital gain.

Keeping the family business

If you're planning to transfer or sell your business to family members, you will want to make sure you get the best value for your business and can fulfill your estate planning wishes. Discuss first with your family and your financial advisor.

No matter what your situation, professional advice can help you prepare a plan for the orderly liquidation of appropriate assets.