As Baby Boomers enter retirement, their approach to charitable giving is transforming the philanthropic landscape. According to a recent study by Fidelity Charitable, over half of pre-retirees and retirees (ages 50-80) are deeply committed to giving back, with 78% stating that charitable giving plays a significant role in their lives. This trend reveals both an opportunity and a responsibility for financial advisors to provide guidance that aligns with their clients’ evolving priorities.
Let’s break down what these trends mean, why they matter, and what financial advisors should focus on to support their clients effectively.
The Growing Importance of Charitable Giving in Retirement
As retirees redefine their golden years, they are looking for ways to make a lasting impact. More retirees are not only donating financially but also contributing their time. The study shows that 71% of pre-retirees and 55% of retirees are involved in volunteer work, with many dedicating more than 13 hours per month to their chosen causes. This strong commitment suggests that retirees are increasingly blending purpose with their financial plans.
For advisors, this means charitable planning is no longer a “nice-to-have” service but an essential part of a comprehensive financial plan. Retirees are not just concerned with wealth preservation; they are focused on leaving a legacy that reflects their values.
The Knowledge Gap: A Crucial Opportunity for Advisors
Despite the strong interest in charitable giving, the study highlights a significant gap in knowledge among retirees when it comes to tax-efficient giving strategies. Only about half (51%) of retirees have had conversations about charitable planning with their financial advisors, and 21% are unaware of common giving vehicles like donor-advised funds (DAFs) or strategies for donating appreciated assets.
This knowledge gap presents a crucial opportunity for advisors to enhance the value they bring to clients. Advisors who proactively educate clients about tax-smart strategies, such as bunching donations or contributing appreciated assets, can help them minimize their tax burdens while maximizing the impact of their charitable dollars. Offering guidance on how to use DAFs, which allow clients to invest in a variety of assets while growing those assets tax-free, can differentiate firms in a competitive market.
What Advisors Should Keep Top of Mind
- Personalized Philanthropy Is Key: Today’s retirees want their giving to reflect their personal values and the causes closest to their hearts. Advisors need to offer flexible giving strategies that allow clients to align their financial goals with their philanthropic intentions. Platforms like TIFIN Give, which provide personalized DAFs and family-centered giving experiences, are well-suited to meet these needs.
- Tax Efficiency Matters: As retirees look for ways to give more strategically, tax planning is becoming a crucial part of the conversation. Advisors should be prepared to offer guidance on how DAFs can help clients donate now, take immediate tax deductions, and grant the funds to charities over time. Educating clients about the tax benefits of donating non-cash assets, such as securities or real estate, can also amplify the value of their gifts.
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Legacy Planning: Retirees increasingly view their giving as a legacy for future generations. By helping clients engage their families in charitable decisions, advisors can foster deeper client relationships and help create lasting family legacies. Offering multi-generational giving solutions, such as collaborative DAFs that involve the entire family, strengthens both the philanthropic and financial impact for clients.
Meeting the Needs of Today’s Clients
The study underscores the need for a modern, flexible approach to charitable giving. Clients are looking for more than just tax-efficient strategies; they want a giving experience that reflects their personal values, engages their families, and makes a meaningful difference. Advisors who can guide clients through this journey—using tools like TIFIN Give’s AI-enabled platform—will not only meet today’s client needs but also build long-term, trust-based relationships.
Ultimately, charitable giving has become a cornerstone of retirement planning, offering clients the ability to live out their values while securing tax benefits and creating lasting legacies. Advisors who embrace this shift and provide the tools and education necessary to support it will be well-positioned to serve their clients in this new era of retirement giving.
For more information on how TIFIN Give can help you navigate charitable giving strategies, schedule an introductory call.