Charitable Giving Strategies for People Near Retirement Age

As their retirement approaches, many people find themselves reflecting on how to balance their financial security with a desire to give back. Even when saving for the future, you can contribute to meaningful causes without compromising retirement goals. 

This guide explores charitable giving strategies for people near retirement age, helping you make a positive impact while maintaining financial stability.

Evaluate Your Financial Situation

Before making any charitable contributions, evaluate your financial situation. Understanding your income sources, expenses, and savings goals will help you determine how much you can give.

Consider working with a financial advisor to assess your current budget and forecast your retirement needs. By setting clear boundaries for charitable donations, you can feel confident that you’re making a difference while safeguarding your retirement plans.

Explore Tax-Advantaged Giving

One effective way to give back near retirement is by exploring tax-advantaged giving options. If you are 70½ or older, you can make qualified charitable distributions (QCDs) directly from your IRA to a charity.

This approach allows you to donate up to $100,000 per year without having it counted as taxable income, making it a tax-efficient way to support your favorite causes. 

You can also secure tax deductions through charitable trusts or donor-advised funds, which offer flexible giving options that align with your long-term financial strategy.

Consider Donating Appreciated Assets

Another impactful strategy is donating appreciated assets, such as stocks or real estate. When you donate these assets to a charitable organization, you can avoid capital gains taxes that you would incur if you sold them.

This strategy maximizes the value of your donation while offering a substantial tax benefit. Consult a financial advisor or tax professional to ensure this approach aligns with your financial and retirement goals.

Choose the Right Charitable Causes To Support

The act of giving becomes even more fulfilling when you support causes that resonate with you. Whether you’re passionate about education, healthcare, or environmental conservation, choosing the right charitable causes to support helps your contributions align with your values.

Take time to evaluate different organizations and their impact. Knowing your donation will make a real difference adds a deeper sense of purpose to your monetary donation.

Establish a Giving Plan for Retirement

As you near retirement, creating a long-term giving plan can help you integrate charitable donations into your financial strategy. Determine how much you want to give annually and the organizations you want to support.

Setting up automatic donations or using a donor-advised fund allows you to give consistently without needing to reevaluate your finances yearly. A thoughtful giving plan will enable you to remain financially secure while making a positive impact during your retirement years.

Balancing financial security with the desire to give back can be challenging for people near retirement age, but they can find practical solutions in these charitable giving strategies. With careful planning, your generosity can extend into your golden years.

3 Bad Reasons to Claim Social Security at 65

If you're not acquainted with how Social Security functions, you may presume that there's a single age at which eligible receivers need to apply for benefits. Not so.

You actually get an eight-year window to insurance claim benefits that begin at age 62 and go on till age 70. (Technically, you're not required to apply for advantages at 70, but there's no financial incentive not to.) Smack in the middle of that window is 65, an age often related to retirement.

Here are a few wrong reasons to take benefits then.

Do you think it's your full retirement age?

Your full retirement age is the age at which you're qualified to take your full month-to-month Social Security benefits based upon your earning history.

That age used to be 65, as life expectancies have actually raised, older workers have been required to wait on accumulating their advantages in full.

Presently, the full retirement age for people born between 1943 and 1954 is 66.

Those born in 1960 or later have a full retirement age of 67, as well as for those born between 1955 and 1959, full retirement is 66 and a few more months. For that reason, to take benefits at 65 would mean reducing monthly benefits.

1. What kind of reduced benefits are we discussing?

It relies on your complete old age, yet you'll lose roughly 6.67% of your complete month-to-month benefit for each year you apply early. Therefore, if you're looking at the full old age of 67 yet claim benefits at 65, you'll lower your benefits by 13.34%. The ordinary existing monthly benefit is about $1,400, so if that's what you're eligible for at a complete old age of 67, yet you submit at 65 instead, you'll obtain a little over $1,200 as opposed to $1,400.

2. You assume you're needed to sign up for Medicare and also Social Security all at once

Many people have a tendency to connect Social Security with Medicare, thinking the two programs are interrelated, but they do have mutual regulations. 

One essential distinction is that Medicare eligibility begins at age 65. Also, you have to sign up for Medicare approximately 3 months before the month of your 65th birthday to get things started. 

But don't confuse Medicare eligibility with that of Social Security. Practical as it may appear to apply for both simultaneously, you'll reduce your Social Security benefits by going that route.

Though you're enabled to apply for Social Security as early as age 62, Medicare has a company eligibility age of 65 unless you qualify as a rare exception. 

Consequently, you must generally enroll in the two programs independently unless there's an engaging factor to claim Social Security at 65.

3. You think Social Security will run out of money if you wait

Many Americans file for Social Security before retirement age because they're worried the program is going broke and want to get their hands on their money while they still can. So, let's quell that rumor since it's somewhat unjustified. 

While it's true that the program is encountering some economic difficulties and may need to reduce advantages in the future if Congress does not fix it, there's no reason to think Social Security is disappearing. 

The program can maintain benefits at their present degree until 2034, which leaves lawmakers more years to resolve its future shortfall. Consequently, you should not hurry to file for benefits at 65 because you don't want to wait any longer.

Naturally, there are some scenarios where claiming Social Security at 65 isn't a negative suggestion. For instance, if you find yourself out of work, it's much better to take benefits than acquire credit card debt to pay your living expenditures. 

Yet if you're filing at 65 for any of the above reasons, you're doing yourself an injustice that can come back to bite you in retirement.

How to Supplement Your Retirement with Income from Other People's Properties

Property in Europe (Photo credit: Images_of_Money)

Do you have fears about not having enough money for a comfortable retirement? Perhaps you are looking to invest in property, either to supplement your existing pension, or to become financially independent from the portfolio itself. What you may not have realised, however, is that you don’t necessarily need to “own” a portfolio in order to create cashflow from one. Read on and discover how my daughter Emily and I went from 0 to £5000 per month from properties we don’t actually own... 

Would Ownership Work for Us? 

We had heard a great deal about building a small portfolio of properties that we could buy cheap or finance, refurbish and sell or rent to up-and-coming young professionals. It sounded a good plan on the face of it but the problem was that we were quickly running out of cash. Since the credit crunch, lenders usually require a hefty 25% deposit. Even if a property could be obtained below market value, it was costing us around £21,000 per property. After all that investment, we were only making around £200 per month cashflow. At this rate, we realised that it was going to take a long, long time to become financially free, so it was back to the drawing board. We knew that there had to be another way. 

Single-Lets vs. Multi-Lets 

As I mentioned, renting the property out as a single-let property, namely when the entire property is let out on an AST, just wasn’t producing the cashflow we required. It was then, that we discovered how multi-letting a property, namely renting the property on a room by room basis, created substantially higher cashflow each month. It did not take us long to realize that multi-letting was the way forward. However, we still had the problem of stumping up the hefty deposits required by lenders. That’s when the light bulb moment hit... 

You Don’t Need To Own! 

We knew that multi-letting was the best was for us to maximise cashflow, but we still faced the same problem, namely raising the huge initial deposit. It then suddenly dawned on us. Why do we actually need to buy these properties? We knew that there must be struggling landlords out there who are looking for a guaranteed rent and for someone to manage the property for them. We decided to contact letting agents and make arrangements to rent the properties through what a corporate let. We would rent on a room-to-room basis to multiple renters who would be young professionals between the ages of 23 and 35. The agent would have a guaranteed rent, and we would take care of having minimal renovations performed that were necessary to make the house attractive to tenants. Initially we were met with scepticism and were even thrown out a couple of offices! But we persevered and within 6 months we had 9 multi-let houses in 5 months generating £5000 pcm net! 

Finding the Right Properties 

In our target area, we look to acquire properties that had a number of larger bedrooms, such as Victorian houses. Double bedrooms rent out much more easily than singles, especially if they have an en-suite. We normally look to pay the landlord around £200 pcm for each double bedroom in the house. So a property with 4 double rooms, we will rent off the landlord for £800. We then advertise the rooms for around £400 per room. After all cost, we aim to make £500 per month cashflow off each property. 

This system has been working out well for us and we plan on expanding our portfolio of rent to rent properties in the next year or so. We have created systems so that we only spend a few hours each week managing each property. It really has worked well for us and can work for you too. As Nike would say “Just Do It!” Francis Dolley is an expert on this unique rent to rent system and runs courses in the UK teaching students how they can successfully build a portfolio of properties that they don’t own, yet generate substantial cashflow profits each and every month.