Living Generously in Retirement
We believe retirement isn’t just about financial independence—it’s about living with purpose. For many retirees, generosity is part of that purpose. Whether it’s giving faithfully to a church, supporting a local nonprofit, or leaving a legacy for future generations, charitable giving is one of the most meaningful ways to use your wealth.
But here’s the good news: charitable giving in retirement not only benefits the organizations and people you care about. Done wisely, it can also create tax advantages that stretch your gifts further. It’s one of those rare situations where your financial plan and your values go hand in hand.
Why “Just Writing a Check” Isn’t Always Best
Most retirees give by simply writing a check or making a cash donation—and that’s always appreciated. But often, they don’t realize that other strategies can have an even greater impact. The way today’s tax laws are written, a little planning can allow you to:
- Reduce taxable retirement income.
- Avoid unnecessary capital gains taxes.
- Lower the impact of Required Minimum Distributions (RMDs).
- Free up cash flow to give more than you thought possible.
When you don’t take advantage of these opportunities, you may unintentionally leave money on the table—money that could’ve gone to the causes closest to your heart.
Three Smart Charitable Giving Strategies for Retirees
- Qualified Charitable Distributions (QCDs):
Once you reach age 70½, you can give directly from your IRA to a qualified charity. These distributions count toward your Required Minimum Distribution but don’t increase your taxable income. In plain English: you can satisfy IRS rules, reduce your taxes, and support causes you care about—all at the same time. - Donating Appreciated Assets:
If you’ve owned stock or other investments that have gained value, donating them directly to charity can be more tax-efficient than selling them. You avoid capital gains tax, and the charity receives the full fair market value. It’s a win-win: the organization benefits more, and you keep more of your retirement income intact. - Bunching Contributions for Tax Planning:
Because the standard deduction is higher, many retirees don’t benefit from itemizing charitable gifts annually. By “bunching” two or three years’ worth of gifts into one year, you might qualify for itemizing and gain a larger tax deduction—then take the standard deduction the following year.
The Heart Behind It All
We could talk about tax codes and IRS rules all day, but here’s the real reason this matters: giving is about impact. We’ve seen the joy clients experience when they realize they can support their church more consistently, fund a scholarship in their hometown, or give generously to a cause they’ve prayed over for years—all without straining their retirement budget.
For some, generosity is an act of worship. For others, it’s about leaving a legacy their children and grandchildren will remember. For everyone, it’s about aligning money with meaning. The strategies simply help your heart’s desire go farther.
Putting It Into Practice
As with most areas of retirement planning, there’s no one-size-fits-all approach to charitable giving. The “best” way to give depends on your income sources, tax situation, and long-term goals. But here are some questions worth asking yourself:
- Am I giving in the most tax-efficient way possible?
- Could I be using my IRA or appreciated investments instead of just cash?
- Do I want my giving to be a one-time gift, or a long-term legacy?
- Does my current strategy reflect both my financial goals and my values?
Quick FAQ: Charitable Giving in Retirement
Q: What’s the difference between donating cash and donating appreciated stock?
A: Donating stock allows you to avoid capital gains tax while still giving the full value to charity. Cash gifts don’t offer that extra tax benefit.
Q: Do Qualified Charitable Distributions lower adjusted gross income (AGI)?
A: Yes. Because a QCD isn’t counted as taxable income, it reduces your AGI, which can also help with things like Medicare premiums and Social Security taxation.
Q: Can I give to any charity from my IRA?
A: No. QCDs must go to a qualified 501(c)(3) organization. They can’t be made to donor-advised funds, private foundations, or political groups.
Final Word
Generosity doesn’t have to compete with financial wisdom—they can work together. The tax code has built-in opportunities to help retirees give more strategically, but navigating those opportunities requires thoughtful planning.
At Nickels Wealth, our role is to help clients connect their wealth with what matters most—whether that’s providing for family, supporting ministries, or creating a ripple effect of generosity in their community. Because when your giving is both heartfelt and strategic, everybody wins.
