- The new tax law modified the deduction for charitable contributions
- There are ways to help others in addition to giving money
- In retirement, giving back can align with personal goals
Are you planning on a purpose-driven retirement? Having more time to give back to the causes or people you care about may become more important to you after leaving work, but planning for it can begin much earlier. This is especially true if you’re looking to implement charitable giving into a longer-term tax strategy.
Under the new tax law, charitable donation deductions generally remain, but limits will increase for cash contributions to public charities from 50% to 60% of adjusted gross income (AGI).
The first step? Determining how you’d like to give back. Once you’ve decided what you’d like to support, your financial advisor can help you create a giving plan that aligns with your values, your tax diversification strategy and your financial goals.
Watch our video below to help get your decision-making process started. If any of the options in the video pique your interest, read on for tips on how to plan for them financially.
Donating your skills to a cause
After leaving the workforce, you may want to continue to apply your professional skills to causes you’re passionate about. Consider working with organizations that will tap into your skill set while providing personal fulfillment. If you’ve already been making connections with community organizations outside of work hours, then skills-based volunteering — using your career expertise to help others — may be a natural progression for you.
If you become indispensable to a charitable organization and love spending your days there, you may be able to move into a paid leadership or administrative role. Should this become an option, make sure to talk to your financial advisor and tax professional about planning for a supplemental income in retirement.
Giving around the globe
The dream of exploring the world while making it a better place can become a reality in retirement, when you’ll likely have a more flexible schedule. Traveling with a purpose — commonly referred to as “voluntourism” — can be done independently, but working with an accredited organization can help ensure your safety, as well as the impact of your endeavors. Exploring the world can lead to new friendships and human connections, which are key to well-being. In fact, people who volunteer tend to feel better physically, mentally and emotionally, according to a UnitedHealth Group Study.*
Consider supplementing your health insurance. Medicare and other insurance policies don’t always provide coverage when you’re traveling. Your financial advisor can help determine whether your coverage is sufficient.
Mentoring the next generation
While many Baby Boomers are becoming more involved grandparents, others are choosing to build meaningful relationships beyond the immediate family. You may enjoy tutoring kids in underserved schools, coaching a sports team or mentoring young professionals. Some retirees and empty nesters — especially those who have the space and no urgent desire to downsize — are fostering children who need a temporary home. There’s no shortage of need among our younger generations; it’s just a matter of choosing the right fit for you.
If you receive foster care payments from a qualified child placement agency, the state or local government, these funds count as nontaxable income. You may also be able to deduct expenses related to tutoring or teaching part time if you meet certain requirements. Talk to both your financial advisor and a tax expert early in the process.
Giving through financial support
If you’d prefer to support causes you care about through financial giving, your advisor can help you leverage your assets or life insurance to make an impact while also taking steps to protect your portfolio. At Ameriprise, we create holistic, personalized financial plans that take a variety of considerations into account — from philanthropic goals and family obligations to tax considerations and risk tolerance.
Here are some key questions you’ll want to address when you meet with your advisor:
- Do I need to align my saving goals with a giving strategy?
- Once I do retire, how can my giving plan fit with my lifestyle?
- Are there giving strategies that can work with my tax planning approach?