How to fund your charitable giving in retirement

Finally, your years of hard work and saving have paid off and retirement awaits you. That may mean you’re no longer working and getting a paycheck, so you’re probably on a fixed budget. But what about all the causes you care about and may have supported in the past? Retirement doesn’t mean you have to stop giving to causes and organizations you’re passionate about. Charitable donations undoubtedly benefit the recipient, and research shows they’re good for the giver, too. Supporting a cause you believe in can boost personal happiness and may even reduce stress and inflammation, which improves overall health.¹ And, of course, it generates tax benefits.

With advantages like these, it’s no wonder people want to keep giving to charity throughout their lives — even including charitable giving in their legacy plans.

So, how can you make charitable giving part of your long-term plan? Consider these ways to plan for a retirement where you can support the charities you value and experience all the good that comes from it.

Share your charitable goals with a professional 

As a financial professional, I stay updated on the strategies for optimal retirement — and bonus, I know you. Share your thoughts about giving in retirement and work with me to define and refine your retirement strategy. Together, we can optimize things like your gift and tax strategies, taking advantage of shifting laws and regulations.

Secure steady sources of income 

Simply put, one way to keep giving is to keep earning. Ask me about annuities and other options. Annuities are a way to help replace a paycheck in retirement. Generally, you pay into a plan over time and once the annuity threshold is met, the plan begins to pay you back. These payments become guaranteed income during your retirement years— income you can share with charities you support.²

Additionally, a diversified portfolio that earns robust interest over your lifetime can also provide funds to donate in your later years. 

An interview with Alan and Rebecca Tinter, Shape, PictureUse life insurance 

When people think of life insurance beneficiaries, they tend to think of family and other loved ones. However, policyowners can choose a charity to be a beneficiary of their policy. This does not require any rider.

A charitable benefit rider is another way you can use life insurance to give to a charity of your choice. With a charitable benefit rider, you can select a charity to receive funding from your policy when the death benefit is paid out. And on some term life products, there are unique riders that donate an extra 1% of the death benefit (up to $100,000) — over and above the amount paid to the designated beneficiaries — to any qualified 501(c)(3) charity of the policy owner’s choosing.³ While the donation is not gifted until you pass away, it’s a great way to add charitable giving to your legacy. Some potential advantages of the built-in benefit rider for charity include:

• There is no additional cost to your life insurance premium (subject to state availability). The charitable rider is already built-in when you purchase the policy. 
• The built-in charitable benefit doesn’t take away from payouts to beneficiaries. You can donate without reducing the amount your family receives. 
• You can update the charity to which you’d like to donate at any time. The benefit is flexible to your preferences.

Create a trust fund with donations in mind 

If you have assets or capital you want to donate but don’t know how, I can help you set up a trust fund and create an income tax strategy that best benefits the charity you choose, and works well for you, too.

One type to consider is a charitable remainder trust (CRT). A CRT is an irrevocable trust commonly known as a “split-interest trust” because it has both charitable and non-charitable beneficiaries. It provides you with a stream of income (the “income interest”) for a certain term of years or for your lifetime and allows the balance of that asset to eventually go to your favorite charity (the “remainder interest”). With many benefits, a CRT allows you to use highly appreciated assets to satisfy your income needs and your charitable intent while lessening adverse tax consequences.

Another option to consider is a wealth replacement trust (WRT). Using excess cash flow or other money sources, a WRT purchases a life insurance policy insuring either you, your spouse, or both, depending on how the trust is structured. Upon your death or the death of your spouse, the insurance proceeds are designed to be paid to the trust and “replace” the assets that went to charity. A WRT provides many benefits — mainly it allows you to make a significant charitable contribution without sacrificing a generous legacy to your family.

Remember that time is a resource 

In addition to (or instead of) your money, remember that you can always give your time. In retirement, people often have more free time, and you can use it to deepen your relationship with a cherished cause by volunteering, seeking a seat on the board, or sharing the expertise you’ve honed through your career. Volunteering in retirement can help give you a sense of purpose and has been shown to increase longevity and reduce the risk of Alzheimer’s disease.⁴ You can even get started before retirement by building relationships and learning about opportunities for further involvement when you have more time to give.

With the right retirement strategy and a commitment to the cause, you can remain involved throughout your life — and even beyond. In the process, you’ll enrich your life today, too.

Disclaimer

1 Markham Heid, Why Giving to Causes You Care About Is Good for Your Health, Everyday Health, September 20, 2023, https://www.everydayhealth.com/emotional-health/why-giving-to-causes-you-care-about-is-good-for-your-health/

2 All guarantees, including death benefit payments, are dependent upon the claims-paying ability of the issuing company.

3 The Charitable Benefit rider is available on Guardian Level Term policies. The rider benefit is equal to 1% of the base policy face amount up to a maximum of $100,000. Subject to state availability. Guardian Level Term is issued by The Guardian Insurance & Annuity Company, Inc. (GIAC), a Delaware corporation whose principal place of business is 10 Hudson Yards, New York, NY 10001. 1 888 GUARDIAN (1 888 482 7342). Policy form numbers: GLT 10, 15, 20, 30: 20-GLT Charitable Benefit Rider: 20-CBR GIAC.

4 Lisa Howard, Volunteering in late life may protect the brain against cognitive decline and dementia, UC Davis Health, July 20, 2023, https://health.ucdavis.edu/news/headlines/volunteering-in-late-life-may-protect-the-brain-against-cognitive-decline-and-dementia/2023/07

Material discussed is meant for general informational purposes only and is not to be construed as tax, legal, or investment advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary. Therefore, the information should be relied upon only when coordinated with individual professional advice. Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation. Links to external sites are provided for your convenience in locating related information and services. Guardian, its subsidiaries, agents and employees expressly disclaim any responsibility for and do not maintain, control, recommend, or endorse third-party sites, organizations, products, or services and make no representation as to the completeness, suitability, or quality thereof.

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