Serving retired clients can often be challenging since their needs and interests can be markedly different from individuals still in the workforce.
Here are some characteristics of retirees and their charitable giving situations to keep in mind:
They are less reactive in their giving. Retirees sometimes feel a sense of relief as requests for funding slow down, especially for local business owners. Business owners are frequently asked for funding requests from nonprofits, and as they step away from leadership roles and into retirement, it gives them a chance to reflect on their giving and take a more strategic approach – investing in causes and nonprofits that inspire them.
They are less likely to itemize deductions. Many retirees apply the standard deduction on their tax returns because they don’t have many expenses that qualify for itemization. Through a donor advised fund, your clients may be able to concentrate charitable contributions into particular tax years and reap benefits above and beyond the standard deduction.
They are often more interested in involving children and grandchildren in their philanthropy. Your retired clients may want to include their children and grandchildren in their charitable plans as a way to stay connected. We can help them formalize roles for these family members as advisors and successor advisors of the retiree’s donor advised fund and make sure they are included in the charitable estate planning process.
They are excellent candidates for Qualified Charitable Distributions (QCDs). Your clients who are at least 70½ can direct a tax-free distribution (up to $105,000 per individual in 2024) from an IRA to a qualified charity. For your clients who must take Required Minimum Distributions (RMDs), the QCD is especially beneficial since the distribution to charity counts toward the RMDs and therefore never impacts their taxable income. Keep in mind that QCDs cannot contribute to a donor advised fund, but the Community Foundation has several other fund types that can accept these assets.
Contact us to learn more about effective charitable strategies for your retired clients.
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