Rethinking Charitable Giving in Retirement
Retirement can change the way money comes in, the accounts it comes from, and the decisions surrounding how it is used.
That can also change charitable giving.
Someone who regularly supported charitable organizations during their working years may need to think differently about how those gifts fit into retirement. At the same time, having more time to become involved with causes they care about may lead them to think more intentionally about the role charitable giving will play in their long-term or estate plan.
Your Income Looks Different in Retirement
During working years, charitable gifts may have come directly from current income. In retirement, money may instead come from Social Security, pensions, investments, retirement accounts, or a combination of sources.
That can make it worth reconsidering how charitable gifts are funded. The same approach that worked while receiving a regular paycheck may not fit as well once income and assets are structured differently.
The question is not necessarily whether to give more or less. It is whether your charitable giving still works comfortably alongside the income and assets you need for your own retirement.
Retirement Accounts Can Be Part of Charitable Planning
Retirement accounts can play a role in charitable giving in more than one way.
For some people, that may mean making a charitable gift directly from an eligible IRA through a qualified charitable distribution, or QCD. For others, it may mean naming a charity as a beneficiary of a retirement account so that some or all of the account passes to the organization after death.
Those are different planning choices, but both are examples of why retirement accounts may deserve a closer look when charitable giving is part of the larger estate plan.
Think About What You Want Your Giving to Accomplish
Retirement can also provide a chance to become more intentional.
Is the goal to support an organization every year? Fund a particular program? Leave a larger gift after death? Continue giving during life while also including charity in the estate plan?
The answer can affect how a gift should be structured.
A person who wants to support a local organization each year has a different goal from someone who wants to create a long-term charitable legacy. Both can be part of a thoughtful plan, but they do not necessarily call for the same approach.
Charitable Giving Can Be Part of Beneficiary Planning
A charitable gift can be made in several ways as part of an estate plan.
For example, someone may choose to name a charity as a beneficiary of a retirement account, life insurance policy, or another asset that passes by beneficiary designation. Those assets generally pass according to the beneficiary form rather than instructions in a will.
That is why beneficiary designations should be reviewed along with wills and trusts when charitable giving is part of the plan. The tax consequences can also vary depending on the asset and who receives it, so legal, tax, and financial professionals can help coordinate the details.
Your Family Plan Still Matters
Charitable giving does not have to compete with providing for family.
Some people want children or grandchildren to remain the primary beneficiaries while leaving a smaller percentage to charity. Others have reached a point where their family is financially secure and want charitable organizations to play a larger role.
Retirement is a useful time to revisit that balance because both assets and priorities can look different from when the estate plan was first created.
A charitable plan should reflect what matters now, not simply what was written into documents years ago.
If retirement has changed your financial picture or the way you want to support the organizations that matter to you, our experienced team at Wilson Law can help you coordinate charitable giving with your retirement and estate planning. Call our office at 866-603-5976 or reach out through our website and we will be in touch to schedule a consultation.
