How They Got Unstuck Before Retirement

You know the feeling. A fund you bought years ago has done well, but at this point it owns you more than you own it. Selling means a tax bill. Holding means more of the same. So you keep doing nothing, and every year the trap gets a little tighter.

That's exactly where David and Karen were when we first sat down.

On the Edge of Retirement, Quietly Stuck

Both in their late 60s. Retiring next year. Around $2–3M spread across pre-tax, Roth, and a taxable brokerage account. By most measures, they'd done everything right.

But inside that taxable account sat a handful of mutual funds they'd held for nearly twenty years. Old favorites. Big-name funds with clever marketing and big embedded gains.

The Funds That Quietly Started Running the Show

Over time, those positions had become a comfortable cage. They'd held them so long, and the gains had grown so large, that selling felt almost unthinkable.

It's a bit like an old house with a great location but a leaky roof, drafty windows, and a furnace that eats money every winter. You love the address. But the upkeep is quietly costing more than you realize.

In their case, the upkeep was twofold. Hidden expense ratios of around 0.7%, paid straight to the fund company and never shown on a statement. And annual capital gains distributions they had no control over.

Running the Real Break-Even

The shift was simple. Stop guessing, run the numbers.

Inside a mutual fund, the manager is constantly buying and selling. When they sell winners, the gains get passed straight through to you, even if you didn't sell a single share. That's the surprise tax bill so many investors quietly absorb every December.

Compare that to a low-cost ETF holding a similar allocation. Expense ratio around 0.03%. No forced distributions. You decide when, and if, to sell.

When you stack the hidden costs and forced taxes of the old funds against the clean ETF version, a break-even point appears. For David and Karen, it was just two to three years. After that, every year they held the old funds was a year of paying more than they had to.

The Part the Spreadsheet Misses

Numbers were only half of it. The other half was how they felt.

One position had quietly become a concentrated bet on a handful of tech stocks. They didn't feel diversified. They didn't feel in control. And they were about to enter the most important chapter of their financial life carrying that weight.

Voluntarily realizing some gains this year wasn't free. There was a tax bill. But on the other side of it was a portfolio that was diversified, low-cost, and finally theirs to steer.

The Quieter Lesson

A position you can't bring yourself to sell isn't really an asset. It's a leash.

Smart retirees don't avoid taxes at all costs. They look at the full picture (fees, forced distributions, concentration, peace of mind) and ask a better question. Is this position still worth holding?

Sometimes the answer is yes. But you should know for sure, not by default.

Thank you for reading!

Last thing – I read every single reply to these emails.

I use these responses to guide my content, so your question might become next week's deep dive.

Happy retiring,

Josh Rendler, CFP® Founder, Motion Retirement Partner, Award-Winning Retirement Firm