It’s really never too early – or too late – to do retirement planning.
On the one hand, the younger you are, the more you benefit from a longer period to accumulate assets and invest them; you also have time to think about how best to spend those assets once you finally retire. Even if you make some mistakes in the process or become preoccupied with other matters for a year or two, time will generally be your friend.
If, on the other hand, you’ll soon be retiring or have perhaps retired already, you’ll want to use the time you have wisely. Still, with a few adjustments here and there, you may well be able to make your retirement years more enjoyable.
Whatever your circumstances, be sure to consult professionals with expertise in areas such as:
- budgeting and cash management
- various types of insurance
- estate planning
- medical, social, and other services geared toward older persons
Don’t overlook ways of supporting Bryn Mawr that result in retirement cash flow. Especially if you are precluded from making additional contributions to an IRA or a qualified retirement plan, a charitable life-income plan can supplement existing arrangements. Here are some of your choices:
- A charitable gift annuity makes favorably taxed lifetime payments to you (or to you and your spouse), plus you receive an upfront tax deduction. If you’re still working, you can defer the start of the payments, whereas if you are retired, you’ll likely want the payments to begin immediately.
- A charitable remainder trust is similar to a gift annuity in some respects but offers greater flexibility. This can be very appealing if you would like a tax deduction and don’t need additional income now but would like to secure a source of payments in retirement.
- A contribution to Bryn Mawr College’s pooled income fund produces a current tax deduction. As with a mutual fund, your gift is invested with gifts made by others, and you receive your share of the fund’s earnings.
- If you are age 70-1/2 or older, you can make an IRA charitable rollover to Bryn Mawr directly from your traditional IRA. Such a distribution will satisfy your annual minimum required distribution and permit a tax-free gift of up to $100,000 to Bryn Mawr. The IRA charitable rollover legislation was made permanent in December, 2015 so you can take advantage of this tax advantaged way of giving every year. Separately, drawing on assets in an IRA or a qualified retirement plan to make current gifts to Bryn Mawr can sometimes make sense for anyone over age 59-1/2, although careful planning is required.
- As retirement planning vehicles such as defined contribution plans, tax-deferred annuities, and many IRAs contain income that has never been taxed, you'll want to devote attention to your beneficiary designatioins. Previously untaxed amounts left to family members and other individuals will be taxed when received by them, but not when received by Bryn Mawr College, which is a tax-exempt entity. Likewise, tax savings can be combined with providing for heirs when certain retirement plan assets are used for a gift annuity or a charitable remainder trust at the end of your life.
Now that we’ve given you plenty to think about, please let us know if we can be of any assistance to you and your advisors!
The information on this website is not intended as legal or tax advice. For such advice, please consult an attorney or tax advisor. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income taxes include federal taxes only. State income/estate taxes or state law may impact your results.