Give Now or Leave an Inheritance? How to Balance the Options

An older man looks at his laptop at his kitchen island. — (Image credit: Getty Images)

Retirement is a significant life goal, and reaching that milestone often prompts questions about travel plans, new passions and how to fill newfound free time.

The most important questions, however, are often the ones people aren’t asking: How much of your retirement savings are you setting aside for charitable causes and gifts? Will you leave an inheritance for your family, or will you share some or all of your wealth during your lifetime?

If you are wondering about your legacy, read on for five tips to help you decide which approach may be right for you.

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1. Understand your retirement needs

If you’re feeling overwhelmed by decisions tied to your legacy, you’re not alone. Ameriprise Financial’s 2024 Couples, Money & Retirement study found that about 36% of respondents reported feeling nervous about spending their retirement savings, and more than half (52%) had yet to build an estate plan.

It’s important to first ensure your retirement funds last for the duration of your lifetime while allowing for unexpected expenses and emergencies.

Given today’s longer life expectancies, it’s crucial to account for inflation and prepare for a retirement that could last decades.

2. Considerations for giving while living

Giving while living means actively sharing your wealth and resources during your lifetime. This could be through donations to nonprofit organizations and other causes that are important to you or by giving financial gifts to loved ones.

Giving during your lifetime is a common choice: An Ameriprise Financial survey found that 20% of respondents gifted significant amounts of money while they were still alive, with children and charities being the most common recipients.

There are benefits to distributing your retirement funds this way. With annual gift tax exclusions, you can give up to $19,000 — or $38,000 for married couples — to as many loved ones as you want annually without incurring a federal gift tax.

Gifts donated to nonprofit organizations or other qualifying charities during your lifetime can also entitle you to an income tax deduction.

Individual retirement account (IRA) owners aged 70½ or over can transfer up to $108,000 in 2025 from their IRAs to charity tax-free each year, through qualified charitable distributions (QCDs).

For those who are at least 73 years old, QCDs count toward your IRA required minimum distribution if it is the first distribution you make from your IRA that year.

Giving while living affords you the emotional benefit of seeing your gifts make a positive impact in real time and provides immediate support for your beneficiaries.

That said, gifting significant portions of your nest egg has the potential to put your financial security at risk, so it’s crucial that your plans account for scenarios that could throw your retirement off course, such as illness and long-term care.

3. Factors for leaving an inheritance

Knowing that loved ones and charitable causes will receive your support after you’re gone can bring you comfort. To make that happen, you may consider setting up a trust according to your wishes or giving back to causes you value.

Gifts made to nonprofit organizations following your death have the added benefit of reducing your taxable estate, thereby maximizing the size of the inheritance granted to your beneficiaries.

Transferring your wealth after your death also ensures you have control over your savings and provides a structured giving approach.

You can move through your retirement years knowing you still have funds available if you’re faced with unexpected expenses or long-term care needs.

On the other hand, the financial support you leave behind may come too late to be of maximum impact to your heirs, who may have benefitted from your gift earlier to further their education or buy a house, for example.

4. Find a balance between both approaches

It’s possible — and arguably beneficial — to do a combination of giving while living and transferring wealth after your death.

The discussion then becomes one of balance, and of allocating the appropriate funding to each spending category, so you aren’t left wondering whether you made the right choices during your hard-earned leisure years.

It’s crucial to begin nailing down the details of your estate plans early on and updating them as necessary.

5. Seek professional guidance

The best place to start is having honest and open conversations with your spouse and family about what you want your wealth to mean for you, your loved ones and your community. From there, you can team up with a financial adviser to turn that vision into reality.

Working with a financial adviser isn’t only common, it’s helpful: Of the couples who participated in Ameriprise Financial’s 2024 survey, 58% reported using a financial adviser, and 97% of that group said their adviser improved their financial well-being.

Choosing how to spend your retirement savings can feel overwhelming, but working with a financial adviser can alleviate concerns and help you build a legacy that makes an impact now and for years to come.

Investment products are not insured by the FDIC, NCUA or any federal agency, are not deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value.

Ameriprise Financial, Inc. and its affiliates do not offer tax or legal advice. Consumers should consult with their tax advisor or attorney regarding their specific situation. Investment Advisory products and services are made available through Ameriprise Financial Services, LLC a registered investment advisor. Securities offered by Ameriprise Financial Services, LLC. Member FINRA and SIPC.

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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Deana Healy, CFP®, is Vice President of Financial Planning & Advice for Ameriprise Financial. Healy and her team are responsible for executing the overall financial advice strategy at Ameriprise, including advice operations, policy and sales enablement, which drives the firm’s more than 10,000 financial advisers to help clients meet their goals with confidence. In addition, Healy oversees the firm’s Advanced and Specialty Advice offering with a particular focus on high-net-worth clients and those with complex situations.