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Retire With Confidence is the podcast designed to help you move beyond the fear of the complexity of finances so you can be financially free to achieve personal significance. Tune in with Josh Duncan each week to turn fear into fuel that drives you into Freedom & Significance.
Welcome to the retire with confidence podcast. If you're a high earning professional, business owner, or someone approaching retirement and wondering whether you are truly on track, you are in the right place. This podcast is all about helping you make smart, confident financial decisions without the fear, confusion, or sales pressure that so often comes with money advice. Each episode is designed to break down complex topics like retirement planning, investing, taxes, and cash flow in plain English so you can understand what really matters and avoid the most common and costly financial mistakes. Everything you hear here is educational, fiduciary focused, and grounded in real world planning experience working with clients just like you.
Josh:I'm your host, Josh Duncan, partner at F5 Financial Planning. Let's get started. Have you ever felt torn between wanting to support the causes you care deeply about and wanting to make sure your own financial future stays on track? Maybe you've wondered, how much can I realistically afford to give? Or how do I make my giving more intentional?
Josh:Or even, is there a smarter, more tax efficient way to do this? If that sounds familiar, stick with me, because today we're talking about how to incorporate charitable giving into your financial plan in a way that's sustainable, tax smart, and aligned with your personal values. Over the next several minutes, we'll walk through, number one, why charitable giving belongs in your financial plan. Two, how to determine your personal giving strategy. Three, the most effective tax efficient giving techniques.
Josh:Four, how to integrate giving with your retirement, estate, and legacy goals. And five, common mistakes to avoid and practical next steps. By the end of this video, you'll have a framework for giving generously without jeopardizing your long term financial security, a balance that many families struggle to find. So let's dive in. Let me pause for a moment and make something clear.
Josh:Charitable giving is not just a nice to have or something you do randomly at the end of the year. For many people, giving is deeply tied to identity, values, faith, purpose, and the desire to leave the world better than they found it. But here's the catch. Without a plan, giving often becomes inconsistent, emotional, and sometimes even inefficient. And when it's not aligned with your larger financial goals, giving can create uncertainty or even stress.
Josh:That's why intentionally incorporating charitable giving into your financial plan matters. It turns giving from something reactive into something purposeful. Now there are three main reasons charitable giving should be a part of your financial plan. Reason one, clarity and intentionality. When you know why you're giving and how much you plan to give each year, it's easier to align your giving with your values.
Josh:You stop responding or even ignoring every request that hits your inbox, and instead focus on the causes that matter most. Reason two, cash flow confidence. A structured giving plan ensures that generosity doesn't conflict with saving for retirement, paying your mortgage, or funding your kid's college. It lets you give confidently without wondering whether you can afford it. Reason three is tax efficiency.
Josh:The tax code offers some powerful incentives for charitable giving, but only if you understand how to use them. Incorporating giving into your financial plan allows you to maximize tax savings and stretch your charitable dollars further. So, yes, charitable giving is emotional and meaningful, but it's also a financial strategy. And when you approach it thoughtfully, it becomes one of the most rewarding parts of your entire plan. Let's talk about creating your charitable giving strategy.
Josh:A charitable giving plan shouldn't start with numbers. It should start with meaning. Here's a simple four step framework you can use. Step one, identify your values. Ask yourself, what issues or causes matter most to me?
Josh:What change do I wanna see in the world? What organizations have personally impacted my life or my family? Some people care deeply about education, others about faith based missions, others about food insecurity, or health care, animal welfare, environmental work, or community outreach. Your giving should reflect your values, not someone else's. Step two, determine your giving capacity.
Josh:This is where your financial plan comes in. Once you know your income, your savings targets, and your long term projections, you can determine how much you can afford to give, not just this year, but consistently over time. For many families, this ends up being a specific percentage of income. For others, it's a dollar amount or a hybrid. The goal is not to hit some ideal target.
Josh:The goal is to choose a number that feels aligned with your values and sustainable for your finances. Step three, choose your giving rhythm. Do you prefer giving monthly, annually, in response to specific needs, or in larger strategic chunks? There's no right answer. Only what fits your plan and your personality.
Josh:Step four, focus your giving. A common mistake is spreading donations across 20 or 30 organizations with just small amounts. It feels generous, but it rarely creates meaningful impact. Instead, choose one to five organizations or causes that matter most to you. This allows your giving to be deeper, more strategic, and more fulfilling.
Josh:A focused plan creates both clarity and impact. Let's move into the part that most people never get around to. The strategy behind charitable giving. Giving from the heart is wonderful, but giving strategically can multiply your impact. Here are the five most effective tax efficient charitable giving strategies explained in plain English.
Josh:Number one, giving appreciated investment assets instead of cash. This is one of the most powerful charitable strategies available. Let's say you bought shares of a stock fund more than one year ago for $10,000, and now it's worth $20,000. If you sell that investment, you'll owe capital gains tax on the $10,000 of growth. But if you donate those shares directly to a qualified charity or to a donor advised fund, you avoid the capital gains tax completely.
Josh:Plus, you receive a charitable deduction for the full fair market value. Now note, there are limits to the deduction, but this allows you to give more at the same cost, and it helps rebalance your portfolio at the same time. Number two, donor advised funds or DAFs. A donor advised fund is like a charitable investment account. You put money or appreciated assets into the fund, receive the tax deduction that year, and then recommend grants to charities over time.
Josh:DAFs are especially useful if you want to bunch several years of giving into one year, or you wanna donate appreciated securities, or you wanna remain anonymous, or you wanna simplify record keeping, or you want your giving to continue long term. Think of it as creating your own miniature charitable foundation without the complexity or cost. Number three is qualified charitable distributions from IRAs. If you're over age 70, you can make what's called a qualified charitable distribution or QCD directly from your IRA to a qualified charity. The amount you give counts towards your required minimum distribution, but it's not included in your taxable income.
Josh:This is incredibly valuable because lower taxable income can reduce Medicare premiums, the taxation of Social Security, and your overall tax burden. This is one of my favorite strategies for retirees who want to give, but also wanna manage taxes efficiently. Number four is charitable bunching. Now since the standard deduction increased a few years ago, fewer people itemized deductions. But charitable bunching allows you to regain some of those tax benefits.
Josh:Instead of giving a little bit every year, you bunch two or three years of donations into one year. This pushes your deductions above the standard deduction, allowing you to itemize. You can still distribute gifts to charities on your normal schedule using a donor advised fund. But from a tax standpoint, you get more benefit by clustering your giving. Number five, charitable trusts and advanced strategies.
Josh:For families with substantial assets or desire to create long term impact, tools such as charitable remainder trusts, charitable lead trusts, and private foundations can be powerful. These strategies can provide lifetime income, reduce estate taxes, transfer wealth to heirs, and support charities for decades. They require professional guidance from your financial planner and attorney, but they demonstrate just how flexible charitable planning can be. Charitable giving isn't just about writing checks. It can play an important role in your retirement strategy, your estate plan, and legacy you leave behind.
Josh:Let's break this into three parts. Part one is charitable giving in retirement. And during retirement, your income sources shift from salaries to Social Security pensions and withdrawals from investment accounts. This means taxes become even more important, and charitable giving can help manage your tax picture. We already talked about QCDs from IRAs, which often provide the most tax efficient way for retirees to give.
Josh:But here are some other considerations. If you're selling property or a business during retirement, giving part of that asset before the sale can reduce taxes significantly. If you have highly appreciated investments, donating them instead of selling can help rebalance your portfolio tax efficiently. If you have years with unusually high income, like the final year of work, that may be the perfect time to front load charitable contributions through a donor advised fund. Your giving strategy in retirement should be coordinated with your tax adviser and financial planner to ensure your generosity also supports your long term financial security.
Josh:Now part two is charitable giving in your estate plan. Many families wanna leave part of their estate to charity, but they aren't sure the best way to do it. Here's a simple rule of thumb. Taxable accounts are best left to heirs, and pretax retirement accounts are often best left, at least in part, to charity. Why?
Josh:Well, because charities do not pay income tax. If your kids inherit your IRA, they will eventually pay income tax on every dollar withdrawn. But if a charity receives your IRA, the money goes to work tax free. So if your goal is to maximize what your heirs receive and support the causes you care about, redirecting a portion of your IRA to charity can be an extremely smart strategy. You can do this through beneficiary designations, which are simple, efficient, and avoid probate.
Josh:Now part three is legacy and family values. For many people, charitable giving is not just about tax savings or financial efficiency. It's about teaching the next generation what truly matters. Here are a few ways families build a charitable legacy. First, setting up donor advised fund and involving children or grandchildren in the annual grant making process.
Josh:Next is creating a family mission statement for giving. Next, holding an annual family meeting where kids choose causes to support. Documenting the why behind certain charitable bequests in your estate plan when giving becomes part of your family culture. You can create a legacy that extends well beyond money, and it becomes part of who your family is. Now before we close, let's cover some common mistakes people make when it comes to charitable giving.
Josh:Mistake one, giving without a plan. Random reactive giving may feel generous, but it rarely aligns with your values or financial goals. A plan brings clarity. Mistake two, giving cash when appreciated assets would be better. If you have investments with significant gains, donating those first can provide more impact with less cost.
Josh:Mistake three, forgetting that record keeping matters. Charitable deductions require documentation. Donor advised funds help with this. But if you were giving directly, make sure you have written acknowledgement. And mistake four, ignoring taxes.
Josh:Poorly timed giving can reduce your tax benefit. Strategic timing, especially around higher income years or required minimum distributions, can make a big difference. And mistake five, failing to review your strategy. A giving plan is not a one and done exercise. Your income changes, your family changes, your values may evolve, your tax situation may shift.
Josh:Review your charitable plan annually to make sure it still aligns with who you are and what you want to accomplish. Let's recap what we covered today. First, charitable giving belongs in your financial plan because it brings clarity, intention, and tax efficiency to something that is deeply personal. Second, a meaningful giving strategy begins with understanding your values, your financial capacity, and the causes that matter most. Third, there are powerful tools available like appreciated asset donations, donor advised funds, qualified charitable distributions, and charitable bunching that can dramatically enhance your tax benefits while amplifying your impact.
Josh:Fourth, charitable giving plays an important role, not only today, but also in your retirement plan, estate plan, and family legacy. And fifth, avoid the common pitfalls. Giving without a plan, ignoring tax strategy, donating cash when assets would work better, and failing to review your approach over time. My hope is that this conversation gives you confidence to give intentionally, joyfully, and strategically. So your generosity creates the impact you want while keeping your financial life on track.
Josh:If you found this episode helpful, please consider subscribing to the podcast and leaving a review. It helps more people find the show and continue learning how to make smarter financial decisions. I'm Josh Duncan, partnered F5 Financial Planning. If you would like to learn more about how we help our clients achieve financial freedom for personal significance, please visit our website at www.f5fp.com. Thanks for listening, and I'll see you in the next episode.