Hmm... honestly I was expecting most people to go the other way and say wait to donate more after the money has grown. I guess I should start giving at least a little bit now to strengthen my generosity muscle.
I.P. Daley, I like the perspective of looking at it like a skill. I've really become a believer that a lot of apparently simple things in life actually involve a learning curve and habit formation like other more difficult things.
The donor advised fund is also an interesting idea. I'd never heard of that.
I wrote a bit more about my donor advised fund strategy and how it relates to
OMY syndrome today.
Excerpt:
"If you plan to do a fair amount of charitable giving in retirement, it’s best to plan for it several years before retiring. I’m an advocate of using a donor advised fund (DAF) to build up a large reserve from which you can give.
My OMY giving plan is this: use my last several years of paid employment to build up a sizable DAF, giving up to 30% of adjusted gross income (AGI) each year until the DAF is equal to 10% of my own invested assets.
Why 30% over several years? I will intelligently donate mutual funds with significant capital gains. The cost basis becomes irrelevant when received by the DAF, and nobody pays capital gains taxes. When giving appreciated assets, the IRS limits donations to 30% of AGI. When donating cash, the limit is raised to 50%, but I want to give in the most tax-efficient manner, so I’m not donating cash.
Also, I want to give now while I’m in a high tax bracket, to benefit from a larger tax deduction. Waiting until I’m retired to build up a DAF would represent a missed opportunity. It will take more than three years to stuff a year’s salary into the DAF, so I plan to ramp up my giving soon."
I do give from the fund currently; the money doesn't just sit there, but I try not to give more than about 5%. Kind of like a safe withdrawal rate, but I can afford to be a bit looser with the DAF withdrawal rate compared to my own SWR when I retire.
Best,
-PoF