But with some guidance, you can make choices that work well for you and those charitable groups you support.

Of course, you could simply give money to these groups. However, by donating other types of assets, can you increase the value of your gift and gain greater tax benefits, too?

It’s certainly possible, but your ability to gain any tax advantages depends somewhat on whether or not you can itemize deductions on your tax return.

Due to legislation passed a few years ago that significantly increased the standard deduction, many people may no longer be itemizing. But if you still itemize, you can generally deduct up to 60% of your adjusted gross income for cash donations to IRS-qualified charities.

Another contribution strategy involves donating other assets, such as stocks. You could donate stocks directly to a charitable group, but you might gain more benefits by making an irrevocable contribution to a donor-advised fund (DAF).

Again, assuming you can itemize, you can deduct the full fair-market value of the asset, up to 30 percent of your adjusted gross income, and your contributions can be invested in mutual funds or similar vehicles.

The contributions have the opportunity for growth, and distributions to the charity are tax-free. You can then decide, on your own timetable, which IRS-qualified charitable groups you would like to receive the money. Furthermore, if you donate stocks that have risen in value, you won’t incur potential capital gains taxes that you would have when you eventually sold the stocks.

These taxes can be considerable, especially if you’ve held the stocks for a long time. (You’ll want to consult with your tax advisor on how charitable gifts can affect your taxes, especially if you’re thinking of using a donor-advised fund.)These charitable donation methods are not secrets, and they are available to many people – you don’t have to be wealthy to employ them.

Yet, here’s an interesting statistic: Those who work with a financial advisor on charitable strategies are more than three times as likely to donate non-cash assets such as stocks than those who contribute to charities but don’t work with an advisor, according to an August 2022 survey from financial services firm Edward Jones and Morning Consult, a global data intelligence company.

These findings suggest that many more people could be taking advantage of tax-smart charitable giving moves – if only they had some help or guidance.

Also, by getting some professional financial assistance, you may find it easier to implement your charitable giving decisions within your overall financial strategy, which is designed to help you meet all your important long-term goals, such as achieving a comfortable retirement.

Your instinct to help support charitable groups is a worthy one – and by getting some help, you can turn this impulse into actions that may work to everyone’s benefit.

Also, the monthly Medicare Part B premiums are declining next year, to $164.90/month from $170.10/month, which will also modestly boost Social Security checks for those enrolled in Part B, as these premiums are automatically deducted.\

Of course, the sizable COLA is due to the high inflation of 2022, as the Social Security Administration uses a formula based on increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). So, it’s certainly possible that you will need some, or perhaps all, of your larger checks to pay for the increased cost of goods and services.

But if your cash flow is already relatively strong, you might want to consider these suggestions for using your bigger checks:

n Reduce withdrawals from your investment portfolio. When you’re retired, you will likely need to withdraw a certain amount from your portfolio each year to meet your expenses. A boost in your Social Security may enable you to withdraw less, at least for a year. This can be particularly advantageous when the markets are down, as you’d like to avoid, as much as possible, selling investments and withdrawing the money when investment prices are low. And the fewer investments you need to sell, the longer your portfolio may last during your retirement years.

• Help build your cash reserves. When you’re retired, it’s a good idea to maintain about a year’s worth of the amount you’ll spend from your portfolio in cash, while also keeping three months’ of your spending needs in an emergency fund, with the money kept in a liquid, low-risk account. Your higher Social Security checks could help you build these cash reserves. (Also, it’s helpful to keep another three to five years’ worth of spending from your portfolio in short-term, fixed-income investments, which now, due to higher interest rates, offer better income opportunities.)
• Contribute to a 529 plan. You could use some of your extra Social Security money to contribute to a tax-advantaged 529 education savings plan for your grandchildren or other family members.
• Contribute to charitable organizations. You might want to use some of your Social Security money to expand your charitable giving. Your generosity will help worthy groups and possibly bring you some tax benefits, too.

While it’s nice to have these possible options in 2023, you can’t count on future COLA increases being as large. The jump in inflation in 2022 was due to several unusual factors, including pandemic-related government spending, supply shortages and the Russian invasion of Ukraine. It’s quite possible, perhaps even likely, that inflation will subside in 2023, which, in turn, would mean a smaller COLA bump in 2024.

Nonetheless, while you might not want to include large annual COLA increases as part of your long-term financial strategy, you may well choose to take advantage, in some of the ways described above, of the bigger Social Security checks you’ll receive in 2023. When opportunity knocks, you may want to open the door.

The answer depends on your individual situation, because donor-advised funds are not appropriate for everyone. However, if you’re in a position to make larger charitable gifts, you might at least want to see what this strategy has to offer.

Here’s how it works:

• n Contribute to the fund. You can contribute to your donor-advised fund with cash or marketable securities, which are assets that can be converted to cash quickly. If your contribution is tax deductible, you’ll get the deduction in the year you make the contribution to the fund. Of course, these contributions are still subject to IRS limits on charitable tax deductions and whether you itemize your deductions. If you typically don’t give enough each year to itemize and plan on making consistent charitable contributions, you could consider combining multiple years’ worth of planned giving into a single donor-advised fund contribution, and claim a larger deduction in that year. This move may be especially impactful if you have years with a higher amount of income, with an accompanying higher tax rate. If you contribute marketable securities, like stocks and bonds, into the fund, a subsequent sale of the securities avoids capital gains taxes, maximizing the impact of your contribution.
• n Choose an investment. Typically, donor-advised funds offer several professionally managed diversified portfolios where you can place your contributions. You’ll want to consider the level of investment risk to which your fund may be exposed. And assuming all requirements are met, any investment growth is not taxable to you, the donor-advised fund or the charity that ultimately receives the grant, making your charitable gift go even further.
• n Choose the charities. You can choose grants for the IRS-approved charities that you want to support. You decide when you want the money donated and how it should be granted. You’re generally free to choose as many IRS-approved charitable organizations as you like. And the tax reporting is relatively easy — you don’t have to keep track of receipts from every charity you support. Instead, you can just keep the receipts from your contributions to the fund.

Although donor-advised funds clearly offer some benefits, there are important trade-offs to consider. For one thing, your contributions are irrevocable, which means once you put the money in the fund, you cannot access it for any reason other than charitable giving. And the investments you choose within your fund will carry some risk, as is true of all investments. Also, donor-advised funds do have investment management fees and other costs. So, consider the impacts of these fees when deciding how you want to give.

In any case, you should consult with your tax and financial professionals before opening a donor-advised fund. And if the fund becomes part of your estate plans, you’ll also want to work with your legal advisor. But give this philanthropic tool some thought — it can help you do some good while also potentially benefiting your own long-term financial strategy.

Sustainable investing can be defined in different ways, with different terminologies. However, one way to look at a sustainable approach is by thinking of it as investing in a socially conscious way which may involve two broad categories: environmental, social and governance (ESG) investing and values-based investing.

As its name suggests, ESG investing incorporates a broad range of environmental, social and governance risks and opportunities, along with traditional financial measures, when making investment decisions. This approach may have a neutral impact on performance because it maintains a focus on managing risk, traditional fundamental analysis and diversification. Here’s a quick look at the ESG elements:

• Environmental – Companies may work to reduce carbon emissions, invest in renewable energy, decrease pollution and conserve water resources.
• Social – A business may promote gender and pay equality within its workforce, and maintain positive labor relations and safe working conditions for employees.
• Governance – Companies distinguished by good governance may institute strong ethics policies, provide transparent financial reporting and set policies to ensure it has an independent, objective board of directors.

You can pursue an ESG investing approach through individual stocks, mutual funds or exchange-traded funds (ETFs), which hold a variety of investments similar to mutual funds, but are generally passively managed – that is, they do little or no trading. As an ESG investor, you don’t necessarily have to sacrifice performance because ESG investments generally fare about as well as the wider investment universe.

Some investments may even gain from the ESG approach. For example, a company that invests in renewable energy may benefit from the move away from fossil fuel sources.

Now, let’s move on to values-based investing. When you follow a values-based approach, you can focus on specific themes where you may choose to include or exclude certain types of investments that align with your personal values.

So, you could refrain from investing in segments of the market, such as tobacco or firearms, or in companies that engage in certain business practices, such as animal testing. On the other hand, you could actively seek out investments that align with your values. For instance, if you’re interested in climate change, you could invest in a mutual fund or ETF that contains companies in the solar or clean energy industries.

One potential limitation of values-based investing is that it may decrease the diversification of your portfolio and lead to materially lower returns due to narrowly focused investments, prioritization of non-financial goals and too many exclusions.

Ultimately, if you choose to include a sustainable investing approach, you will want – as you do in any investing scenario – to choose those investments that are suitable for your goals, risk tolerance and time horizon.

If sustainable investing interests you, give it some thought – you may find it rewarding to match your money with your beliefs.

Here are a few suggestions:

n Build your retirement savings. The greater your financial resources, the less likely it becomes that you’d ever have to count on your grown children for financial support. You may have access to a 401(k) or similar retirement plan at work, so take advantage of it. Even with an employer-sponsored plan, you also may be eligible to contribute to an IRA. In addition to offering a variety of investment options, a 401(k) and IRA provide potential tax advantages. And once you do retire, be careful about how much you withdraw each year from your retirement plans and other investments.

• Plan for health care costs. Once you are retired, health care costs will be a significant expense. You may have Medicare, but you’ll also want to consider your need for supplemental health insurance to cover traditional medical costs. And you’ll want to consider another potential health-related expense: long-term care. You may never need the services of a home health aide or a stay in a nursing home, but no one can predict the future.
  Medicare does not cover most costs for long-term care, which can be quite high. In 2021, the annual national median cost for a private room in a nursing home was over $108,000, while the median cost for a full-time home health aide was nearly $62,000, according to a survey by Genworth, an insurance company. You may want to consult with a financial professional on strategies for protecting yourself from these costs.
• Create necessary legal documents. If something were to happen to you, and you didn’t have the appropriate legal documents in place, your loved ones could be placed in a bind, both financially and emotionally. That’s why it’s a good idea to create documents such as a durable financial power of attorney, which lets you name someone to manage your finances if you became incapacitated, and a durable power of attorney for health care, which allows someone to make medical decisions on your behalf if you can’t make them yourself. You’ll want to work with a legal professional to develop the documents appropriate for your needs.
• Evaluate your housing needs. As you enter retirement, you may want to evaluate your living situation. Could you downsize to a smaller home, or perhaps a condominium or apartment? Not only might you save money with such a move, but you could also end up relieving your grown children of the responsibilities and hassles involved in clearing out and selling your home should you become unable to do so yourself during the later years of your retirement.

By taking these measures, along with others, you can go a long way toward maintaining your independence and putting yourself in a place where you won’t burden your grown children. And that’s a good place to be.

Consider these four key purposes:

• Unexpected expenses and emergencies – If you face an interruption in employment, you need an extensive home repair or you encounter an unplanned medical expense, you may need access to cash. If you’re not retired, it’s a good idea to have three to six months of living expenses in cash, possibly supplemented by access to a line of credit. If you’re already retired, keeping up to three months of living expenses in cash, possibly supplemented by a credit line, is a good rule of thumb.

• Specific short-term savings goals – You may have some goals you want to meet within the next year or two, such as a wedding, a vacation or the purchase of a new car. And since you have a little more time to meet these needs than you would for an emergency, you might consider using a money market account or a short-term certificate of deposit (CD), in addition to your other savings vehicles.

• Everyday spending – You’ll always need cash to provide for your day-to-day spending needs, such as your mortgage, other debts, groceries, utilities, entertainment and so on. If you haven’t already done so, you might want to create a budget, which could help highlight areas in which you can reduce spending to free up funds for investing in long-term goals. If you’re still working, keeping one to two months’ worth of living expenses in a liquid account may be sufficient, but if you’re retired, you may need up to 12 months of living expenses, which you can adjust to accommodate outside sources, such as Social Security or a pension.

• Source of investment – You can look at cash as an investment source in two different ways. First, cash can be considered its own distinct asset class, and because it typically behaves differently from other asset classes, it can provide some diversification to a portfolio containing stocks and bonds. (Keep in mind, though, that diversification can’t guarantee profits or protect against all losses.)

And second, the cash in your portfolio could be used as part of a systematic investing strategy in which you put set amounts of money at regular intervals into investment vehicles that are appropriate for your goals and risk tolerance.

Clearly, cash is an important part of planning for the future, but there can be too much of a good thing.

While cash may seem like a perpetual safe harbor from the stormy investment seas, it is not without risk. If you hold too much cash, you could underfund your longer-term investments — the ones with the growth potential you need to reach some of your most important goals, such as a comfortable retirement.

Put your cash to work. By using it wisely, you can add a valuable element to your financial picture.

Consolidating them can provide you with several potential benefits, including these:

Less confusion and clutter – If you have multiple accounts in different locations, it may be difficult to keep track of tax documents, statements, fees, disclosures and other important information. Consolidating accounts could help provide clear, simplified account maintenance.

• Less likelihood of “lost accounts” – It may be hard to believe, but many people abandon their retirement accounts, leaving thousands of dollars behind and unclaimed.
• In fact, at the end of 2021, there were nearly 25 million forgotten 401(k) accounts, worth about 20% of all 401(k) assets, according to an estimate by Capitalize, a financial services company that helps individuals roll over retirement plan assets into new accounts. It’s possible that employers can even move small, old accounts out of their 401(k) plans and into an IRA on behalf of their former employees, thus increasing the chances that savers will lose track of their money. By consolidating your retirement plans with one provider, you can ensure you don’t lose track of your hard-earned money.
• Ability to follow a unified strategy – With multiple retirement accounts, and different investment portfolios, you might find it difficult to maintain a unified financial strategy that’s appropriate for your goals and risk tolerance. But once you’ve consolidated accounts with a single provider, you’ll find it easier to manage your investment mix and to rebalance your portfolio as needed. The need to rebalance may become more important as you near retirement because you may want to shift some of your assets into investments that aren’t as susceptible to swings in the financial markets.
• Possible improvement in investment options – Often, 401(k)s may have limited investment selection, so consolidating accounts with a full-service firm may allow for a wider array of products and strategies. This broader exposure can potentially help you improve your overall retirement income strategies.
• Greater ease in calculating RMDs – Once you turn 72, you will need to start taking withdrawals — called required minimum distributions, or RMDs — from your traditional IRA and your 401(k) or similar plan. If you don’t take out at least the minimal amount, which is based on your age and account balance, you could face a penalty. If you have several accounts, with different providers, it could be cumbersome and difficult to calculate your RMDs — it will be much easier with all accounts under one roof.
• So, if you do have multiple retirement accounts, give some thought to consolidating them. The consolidation process is not difficult, and the end result may save you time and hassles, while also helping you manage your retirement income more effectively.

So, how should you go about preparing for shorter-term goals, such as a family vacation, home renovation, wedding or major purchase?

For starters, determine what your goal is, how much you can spend on it and when you’ll need the money. Even if you can’t pinpoint a precise amount, you can develop a good estimate. Of course, the sooner you start this process, the better off you’ll be, because you’ll have more time to save.

Your next decision involves the manner in which you save for your short-term goal. Specifically, what savings or investment vehicles should you use? The answer will be different for everyone, but you need to make sure that your investments align with your risk tolerance and time horizon. And you’ll want to ensure, as much as possible, that a certain amount of money is available for you at the specific time you’ll need it.

If you aren’t able to save enough to reach a short-term goal, you have other options — you can borrow what you need, or you can potentially sell investments to cover the cost. How can you decide which choice is best?

To help make up your mind, you’ll first want to consider some of the most common borrowing options: credit cards, home equity loans, personal loans and margin loans. (A margin loan lets you borrow against the value of investments you already own). How might each of these loans fit into your overall financial strategy? Will the repayment schedule work with your cash flow and budget?

You’ll then want to compare the costs and benefits of borrowing, in whatever form, against selling investments. For example, if you can borrow at a lower interest rate compared to the return you think you can get from your investments, borrowing might be a reasonable choice.

You’ll also need to consider other factors, such as your credit score, taxes, fees associated with selling investments and time needed to repay debts. If, for instance, selling investments will trigger a large amount of taxes, borrowing might be preferable. You’ll also want to consider whether there’s a penalty or high costs associated with selling investments.

In addition, if you have a long time horizon for a loan, you may want to sell investments to avoid paying interest for a longer period of time, and thus driving up the overall cost of borrowing. Finally, keep in mind that you may have built an investment mix designed to align with your goals and risk tolerance. If you were to sell any of these investments to meet short-term needs, you would want to consider the need to rebalance your portfolio to maintain your desired asset allocation.

As you can see, there’s a lot to think about when it comes to paying for short-term goals. But by carefully evaluating your options, you can make the choices that are right for your needs.