People sometimes think they should stop or reduce their charitable giving when they retire. There are many things to take into account when developing your retirement lifestyle plan. Among those considerations, you may take pride in helping organizations and causes near and dear to your heart, and want to continue your charitable giving throughout retirement.
It’s best to be clear about your priorities and thoughtfully consider all of your options before making a financial commitment to charity. Begin by reviewing your financial picture to determine how charitable giving fits within your overall priorities and long-term plan. If you find yourself faced with the possibility of financially coming up short, there are creative options to help you build a legacy and give later, or you can give of your time and talent. On the other hand, if you are in a position to make a financial contribution to charity, here are some things to consider:
- Estimate how much and how often you’re comfortable giving and work with your advisor to make this an ongoing part of your spending plan.
- Do your research. Whether it’s an organization you have established ties with, or a new cause, you’ll want to make sure their vision aligns with your intentions. Charity Navigator provides free financial evaluations of America’s charities and helpful details about how efficient they are with contributions.
- Talk with your personal advisor about the various ways of donating a gift to charity and the potential tax benefits. If you want to magnify the benefit of charitable giving, it’s important to familiarize yourself with the rules surrounding deductibility and specific paperwork needed to document your gift.
Here are several incredibly effective charitable giving vehicles to discuss with your advisor or tax professional if you want to make a significant donation to charity:
- Consider establishing a trust or participating in donor advised funds. Donor advised funds make giving easier and allow you to undertake a more formal giving program, whereas a trust might work well for significantly larger charitable gifts. In either case, it’s critical to seek the advice of an expert.
- Many of our clients want to eliminate taxes and leave more to their loved ones. To answer their need, we developed the Tax-Free Wealth Replacement Strategy. Using annual distributions from your retirement account, we can create a potentially tax-free benefit for your family and a tax-free legacy to a nonprofit organization.
Most importantly, make sure you work with an advisor who understands charitable giving and why it is important to you. Since charitable giving opportunities sometimes arise unexpectedly, (such as disaster relief) be sure to keep your financial advisor informed of how you feel about both planned and unplanned charitable giving.
Greg Hammond, CFP®, CPA and Ron Ware, JD are personal legacy advisors and wealth impact strategists who help people grow and preserve wealth, plan for retirement and manage their charitable giving. See how you can build a legacy of your values, influence and money with a Wealth Impact Assessment. Contact Greg at (800) 416-1655 or firstname.lastname@example.org. Contact Ron at (781) 489-9800, or email@example.com.