Retirement Strategies for Contributing Charitably: Tips and Financial Aid Opportunities

In the realm of retirement, many individuals find a sense of purpose and fulfillment through volunteering and charitable giving. This article explores various aspects of volunteering and charitable contributions, highlighting the benefits for both the individuals and the organizations they support.

Firstly, volunteering for an organisation can serve as a means to determine its effectiveness and potential use of donations. By lending one's professional skills, volunteers can help ensure that their contributions are put to good use, potentially lowering taxes even for those who do not itemize.

For retirees, who often claim the standard deduction, this form of giving can be especially rewarding. Volunteering can provide opportunities to support organisations, such as local schools or rescue centres, and even help determine if they will make good use of any potential donations.

One such example is Jon Merryman, a man from Baltimore County, Md., who has made it his mission to pick up tires in every county across the U.S. Since 2013, Merryman has retrieved an estimated 15,000 illegally abandoned tires, making him physically active in his pursuit.

Another individual, a longtime journalist, is helping high school students publish a local newspaper. This is just one of many examples that demonstrate the diverse ways in which people choose to volunteer in retirement.

When it comes to charitable giving, there are numerous strategies to consider. One such strategy is the use of donor-advised funds. These funds allow individuals to make a charitable contribution, take the deduction on their tax return, and decide later which charities to support.

Donating stocks or other assets that have increased in value to a donor-advised fund can also provide a tax break, as capital gains taxes will not be incurred, and the charity will not pay them either.

The Internal Revenue Service (IRS) does not allow the deduction of the value of time spent volunteering, but out-of-pocket costs associated with charitable work can be deducted if one itemizes on their tax return. This includes expenses such as gas, tolls, and parking.

For those 70 1/2 years old and above, a Qualified Charitable Distribution (QCD) of up to $108,000 can be transferred from a traditional IRA to a charity (or charities) of choice. QCDs are not deductible, but they will be excluded from adjusted gross income, potentially shielding individuals from certain taxes and surcharges.

Moreover, once an individual turns 73, a QCD will count toward their required minimum distribution. This can be particularly beneficial for those looking to manage their tax liabilities.

Regular volunteering in old age can also have health benefits. Studies have shown that it can reduce the likelihood of age-related health problems and cognitive decline.

The author of this article has chosen to support the AARP Foundation's Tax-Aide program by joining it as a volunteer. This program provides free tax assistance to low- and moderate-income taxpayers. The author is also planning to take advantage of QCDs when they turn 70 1/2.

In a world where many are seeking meaningful ways to contribute, volunteering and charitable giving offer a multitude of opportunities for individuals to make a difference in their communities, while also reaping personal benefits. Whether it's picking up tires, publishing a newspaper, or providing tax assistance, every act of service counts.

Retirement Strategies for Contributing Charitably: Tips and Financial Aid Opportunities