Ep 68. What to Learn from Retirees Who Donated All Their Money

In this episode, we walk through all the years of planning we’ve done for two fictional clients, near the end of their retirement. Adam & Alice have saved super well but don’t have any family to pass these assets onto. Their plan covers how to give everything away, funding healthcare in elder years, and building estate plans.

Listen here, watch on YouTube, or keep reading below!

Breakdown of the Case Study

Meet Adam & Alice

Adam & Alice are in their early 80s, well into retirement. Both enjoyed long careers and retired with substantial pensions and a strong habit of saving. Their diligence left them with a comfortable income stream in retirement — but it also created a challenge: their large pensions, Social Security, and required minimum distributions (RMDs) are pushing them into higher tax brackets.

Because they have only one family member, their vision for their wealth is unique: they fund their own needs while directing their excess wealth toward charitable organizations they deeply care about. They have a couple key goals along side this:

• Maximize income for their lifestyle and future care needs
• Reduce taxes throughout retirement
• Ensure assets last their lifetime while enabling significant charitable giving

Challenge

Adam & Alice are not worried about running out of money — their pensions and investments have provided them more than enough. The real challenge is how to use and give away their money wisely:

• They face large RMDs that will grow each year, pushing them into higher tax brackets.
• They need clarity on how much to give away each year while ensuring enough is retained for healthcare or unexpected expenses.
• They want to avoid the risk of paying unnecessary taxes when those funds could be directed to charitable causes they love.
• Without heirs, legacy planning looks different: they want to make an impact now, not just leave behind an estate gift.

Our Approach

We walked Adam & Alice through our three-phase process to bring structure, clarity, and efficiency to their giving and retirement income plan.

Phase 1: Organization

When we began working with Adam and Alice all those years ago, we wanted to get an idea of their financial Big Picture. We needed to know what kinds of benefits and accounts they had, but also what they valued and what their goals were.

• Gathered key financial documents, including pension benefit statements, Social Security records, and all retirement account details.
• Mapped out all retirement income streams (pensions, Social Security, RMDs) and compared them with lifestyle expenses.
• Identified charitable organizations that mattered most to them, and estimated the annual and lifetime giving they’d like to achieve.
• Consolidated scattered investment accounts to streamline recordkeeping, withdrawals, and future charitable distributions.

Phase 2: Strategy

Once we see all the pieces on the board, we are able to start discussing what a tax-efficient giving plan looks like at different stages in their retirement.

• Created a multi-year tax projection, showing how rising RMDs could impact future tax brackets.
• Introduced Qualified Charitable Distributions (QCDs) directly from their IRAs to satisfy RMDs while reducing taxable income.
• Designed a charitable giving strategy that balanced:
  • Annual direct giving via QCDs
  • Funding a Donor-Advised Fund (DAF) for multi-year giving flexibility
  • Reserving funds for their healthcare and personal lifestyle needs
• Stress-tested their retirement income against long-term care scenarios and market downturns to ensure charitable giving would not compromise their own security.
• Plan for different levels of healthcare needs to see the types of funding they might need.

Phase 3: Implementation

Over the years, the avenues and amounts that Adam and Alice choose to give has changed. We make sure their plan changes too. As they search for new organizations to support or have new goal they want to pursue, they have the confidence they need to purse their goals!

• Initiated QCDs to their chosen charities, cutting their taxable income each year.
• Set up automatic transfers from consolidated accounts to simplify their income flow and ensure their giving plan stayed on track.
• Regularly update their tax and financial plan annually to reflect:
  • New tax law changes
  • Potential healthcare costs
  • Any new charitable opportunities they discover

The Results

• Taxes reduced: By shifting part of their RMDs into QCDs, Adam & Alice saved thousands each year in federal and state income taxes.
• Confidence in giving: They know exactly how much they can give each year — without fear of running short on funds.
• Flexibility maintained: Their investments and pensions still cover all lifestyle and potential care needs.
• Joy in impact: Each year, they look forward to deciding which organizations to support — often joking about whether to “buy a sports car or fund another scholarship.”

Adam & Alice share that they feel relieved and fulfilled: instead of worrying about taxes or running out of money, they spend their time choosing how to make a difference. Their plan provides both clarity and freedom — the freedom to enjoy retirement, give generously, and know their finances will support them through every season of life.

Note: The above case study is hypothetical and does not involve an actual Financial Design Studio client. No portion of the content should be construed by a client or prospective client as a guarantee that he/she will experience the same or certain level of results or satisfaction if Financial Design Studio is engaged to provide investment advisory services.

Are You Considering How to Give Charitably?

Here are some additional resources to help you dive deeper:

• VIDEO: Giving Strategies for Retirees: Qualified Charitable Distributions (QCDs)
• ARTICLE: Donating Appreciated Stock: Save in Taxes and Help Those in Need
• ARTICLE: Estate Planning Checklist

But if you’re tired of searching the internet for answers and hoping you get retirement right, what’s stopping you from taking the next step towards financial confidence? Our team specializes in using executive compensation to build tax efficient retirement plans.

Schedule your free zoom consultation with our advisors by clicking “get started.” Let’s build a plan that’s designed for your life, together.

Bonus: Retirement Planning Guide