Charity Donations after Retirement and RMDs

[Catbert]

How do you determine how much to give to charity after retirement and when substantial RMDs kick in?  When I worked (long ago) I donated 5-7% of gross salary to recognized charities.  After retirement I kept giving a similar dollar amount roughly adjusted for inflation and with various tax considerations. 

Our income consists of SS/pension/rental income and starting next year, substantial RMDs.  How should I decide how much to give to charity?  Percentage of income? (What % and what counts as income?)   Percentage of RMD? (What %)  A dollar amount that seems "right" in any given year?  Or ?

I know about  DAFs and QCDs and have used both.  QCDs will be the method for donations  going forward.  I'm not interested in doing a charitable remainder trust as this point.

[MoseyingAlong]

Someone, maybe @Sailor Sam , at one point suggested using a percentage of your annual spend, not income, as a charitable target. I like that idea and have used it since.

[secondcor521]

Two thoughts that might be helpful:

1.  I try, with spreadsheets, to figure out how much left over I will have later if I continue spending as I am now.  This is a static model in my own spreadsheets, but I cross check with FIREcalc and similar.  Once I have an idea of how much I think I will have leftover, I ask myself to what extent I want to (a) spend more, (b) give more to my kids, and (c) give more to charity.

2.  I try to have a rhythm of gifting in my life.  That means each year I establish giving traditions by picking days of the year, amounts, and target charities.  You might give $1K on your birthday, or $5K at Christmas, or $100 on your anniversary or whatever.  Then as that rhythm gets established, I can see if it feels like too much or not enough.  As time goes by I can then adjust the amounts up or down.

As for your question, unless you're doing significant Roth conversions or have business depreciation, your taxable income is probably pretty close to your spendable income, so you could use line 15 of your 1040 and pick a percentage of that to target.

[blueberrybushes]

Catbert,

Don't know if this will help or not - just what we are doing.  We are both eligible to do QCDs although RMDs are a couple of years away.

Our spreadsheet tracks our anticipated NW and donations going forward - each year.  It includes asset allocations and assumptions of returns.  It includes each account we can make donations from in this order: 1) Tradition IRAs - QCD donations with no tax implications, 2) Taxable - donations that we itemize.  For the Traditional IRA accounts, the donations are set up to exhaust these accounts in 8-10 years. By doing this, the QCDs will always exceed the RMDs, so no tax liability.  The donations form the taxable account are set up to maximize the itemized deduction (which is complicated by the IRS limits).

Overall, our goal is to have the same NW in 10 years that we have now.  If we stick to the plan, it will represent about 6% of our NW each year and leave us with plenty to manage "old age" issues.

We have 8-10 charities we donate to (ranging from $1K to $20K/yr).  There is room for one off donations that come along (which we might do from Roth balances). 

Hope this helps a little.