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Charitable Gifts Can Help Answer the Question: How Much Is Enough for Retirement?

Posted February 2019

If you were a pika, a small mammal that lives on the rocky slopes of snowy mountains in the western United States, you would need to accumulate a pile of hay and other plants totaling 50 times your body weight to make it through each winter. For humans in the United States, the “pile of hay” consists of investments and other sources of income—and the challenge is to have enough to last through retirement years of uncertain duration and often with unanticipated needs. There are two types of charitable gifts that can help.

First, more of our metaphor: The pika, a member of the rabbit family slightly larger than a hamster, spends its winters among crevices in the rocks that are blanketed with snow more than six months a year. Since it does not hibernate, it must store enough food to last until the snow melts and the slopes spring to life with new growth. Thus, during the summer months, it can be seen scurrying between mountain meadows and the piles of rocks—dragging flowers, hay, and other grasses and plants to an ever-growing pile at the mouth of its rocky home, all the while keeping an eye out for predators and guarding its stash against the pilfering of other pikas. Accumulating a surplus of 50 times its 1-pound body weight is prudent because the snowfall could be unusually heavy and melting could be delayed.

How much is enough for your future?
So for humans accumulating investments, how much is enough for your retirement? That depends on a number of factors: the age at which you retire, the lifestyle you wish to sustain, your state of health, and the amounts you want to give to children and other beneficiaries—including nonprofits such as ours.

Unfortunately, some 40 million households have no retirement plans or investments, and they will be almost entirely dependent on Social Security. Others, and you may be among them, are much better situated—able to look forward to a secure retirement as well as legacies for loved ones and favorite causes.

You may have achieved some degree of financial success, and you would like to share a portion of your accumulations with us and other charities. However, you hesitate to give any substantial amount now because you are concerned that you might not have enough for personal needs. Just as the pika does not want to run out of food before the winter ends, you don’t want to run out of funds if you are blessed with a long life.

Two types of charitable gifts can help
If you are concerned about your “pile of hay,” you might consider two types of charitable gifts. One is a life-income gift, an example of which is a charitable remainder trust. It can pay you, or you and a spouse, income for life. Often the amount of income is larger than you are currently receiving on the assets you use to fund the trust, and you also receive a charitable deduction that can further improve your cash flow by reducing the income tax you pay. The amount left upon your passing is what comes to us.

The other charitable gift strategy is to leave to us a percentage of whatever remains in your estate after providing for family members. You might, for example, provide in your will or living trust that we receive 20 percent of whatever remains after paying expenses and giving family members specific amounts or certain properties. Similarly, you might execute a change-of-beneficiary form leaving to us a percentage of whatever remains in your IRA, 401(k), or other retirement plan. This type of revocable gift will not add to your concern as to whether you will have enough—for whatever gift may result comes from your surplus. Like the pika, you are prepared for the seasons of your life.

For more information on any type of charitable gift, please contact us today.

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