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.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
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.
Related Content
- How to Talk About Estate Planning With Your Family
- How to Decide How Much Money You Can Afford to Gift in Your Lifetime
- Gifting While You're Alive and Kicking: Tax Benefits and Tips
- Three Ways Parents Can Transfer Wealth to Help Their Kids
- Gift and Estate Tax vs Capital Gains Tax: Which Is Less?
-
I'm 57 with $4.1 million and looking to retire abroad in a few years. I no longer see the point in contributing to my 401(k). Am I wrong?We ask financial experts for advice.
-
Potential Trouble for Retirees: A Wealth Adviser's Guide to the OBBB's Impact on RetirementWhile some provisions might help, others could push you into a higher tax bracket and raise your costs. Be strategic about Roth conversions, charitable donations, estate tax plans and health care expenditures.
-
I'm 57 With $4.1 Million and Plan to Retire Abroad in a Few Years. Can I Stop Contributing to My 401(k)?
We ask financial experts for advice.
-
Potential Trouble for Retirees: A Wealth Adviser's Guide to the OBBB's Impact on Retirement
While some provisions might help, others could push you into a higher tax bracket and raise your costs. Be strategic about Roth conversions, charitable donations, estate tax plans and health care expenditures.
-
One Small Step for Your Money, One Giant Leap for RetirementSaving enough for retirement can sound as daunting as walking on the moon. But what would your future look like if you took one small step toward it this year?
-
This Is What You Really Need to Know About Medicare, From a Financial ExpertHealth care costs are a significant retirement expense, and Medicare offers essential but complex coverage that requires careful planning. Here's how to navigate Medicare's various parts, enrollment periods and income-based costs.
-
The 'Me-First' Rule of Retirement SpendingFollow the 'Me-First" rule and you won't have to worry about running out of money when the stock market goes south.
-
How to Plan Your First International Trip After RetirementRetirement paves the way for a world of exciting (and intimidating) experiences. An overseas journey can be an ideal way to embrace this new phase of life.
-
I'm a Financial Planner: Could Partial Retirement Be the Right Move for You?Many Americans close to retirement are questioning whether they should take the full leap into retirement or continue to work part-time.
-
From Mortgages to Taxes to Estates: How to Prepare for Falling Interest RatesAs speculation grows that the Federal Reserve will soon start lowering interest rates, now is a good time to review your financial plans for housing, estate, taxes, investing and retirement to make the most of potential changes.
