Smart Giving Tips for Retirees: Make Your Donations Count

"Retirement is like a long vacation in Las Vegas. The goal is to enjoy it to the fullest, but not so fully that you run out of money." — Jonathon Clements, author of "How to Think About Money”

Wise words Mr. Clements. The last thing any retiree wants is too many months at the end of the money. But spending wisely does not have to mean the end of charitable giving. It just means doing a little research to donate responsibly and get the best bang for your end of the year charitable buck.

Do Your Homework

The philanthropy world is not immune to scammers eager to get their hands on your hard-earned retirement money. If your retirement budget has a column for charitable giving, be sure to do your homework. Before you write a check – or click send - confirm the legitimacy of the organization you’ve chosen and make sure its mission is aligned with your personal goals. You may want to consult the advice of sites like Charity Watch and Charity Navigator that do the vetting for you, or use the Tax Exempt Organization Search Tool on IRS.gov to find qualified options.

Don’t Be Discouraged by Retirement Roadblocks

Now that you’ve retired, three roadblocks may inhibit your desire or ability to give charitable gifts.

1)    You no longer have easy access to donations made through payroll deductions. This was especially attractive if your employer matched your gift.

2)    A second challenge to retirement giving is cash flow. You want to be generous but not so generous as to jeopardize your financial security.

3)    Finally, there is the tax issue. Donations to qualifying charities are only deductible if you itemize your taxes, and many seniors do not. No tax benefit may impede your ability to donate.

Consider Bunching Your Donations

Bunching is a tax strategy that has gained popularity among retirees. Simply put, bunching means giving two to three years’ worth of donations in one year. Consolidating your charitable giving allows you to create an itemized tax deduction for that one year that will yield more than the standard non-itemized amount.  The following year you can hold back on the donations and still receive the standard deductions for your taxes. The downside of bunching is more emotional than fiscal. If you choose this route, just know if you’ve exhausted your giving for two or three years all at once, you may not be able to make a charitable gift for a few years to come.

Donor Advised Funds

Donor Advised Funds (DAFs) give you the dual benefit of bunching and controlling the timing of your gifts. With a DAF you can bunch your contributions for tax purposes, yet still spread out your donations over time. For example, bunch a large donation in 2024 but decide which charities you want to actually receive these funds in 2025. DAFs also allow for joint or supervised charitable giving so you can enlist your adult kids as advisors for the donations. It’s a great way to pass along your values and introduce them to the joy of charitable giving.

Qualified Charitable Donations

If you are at least 70 ½ years of age, Qualified Charitable Donations (QCDs) are another tax-advantaged option for giving. A QCD is a tax-free donation from your IRA. The bonus is not a tax deduction per se but rather a way to avoid the taxation of an IRA. QCDs are particularly popular with those over 72 who must take required minimum distributions (RMDs). Rather than being forced to take an IRA payment into your adjusted gross income, your IRA custodian can send the funds directly to the charity of your choice. The transferred donation counts as part of your RMD payment and never becomes part of your 1040 income. A win/win.

Charity Begins at Home

Once you are lucky enough to call a premier Overture senior apartment community home, you’ll have a supportive family of like-minded peers with whom to strategize ways of giving back.

Life at Overture: The gift that keeps on giving.