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Charity culture undermines retirement planning

By Owen Galvez
Published in Retirement Planning
June 25, 2023
1 min read
Charity culture undermines retirement planning

Charitable donations may have unintended consequences for retirement planning, according to a recent study by economists. Americans who were the most generous about giving to charity throughout their lives ended up with 40% less retirement savings than those who were less giving. The likely explanation for this surprising correlation is that people who are more focused on giving to charities and others aren’t as focused on saving for their own retirement. And despite the widely-held belief that some people will give until it hurts, those who are the most generous are generally better off financially and earn more money.

Furthermore, Americans have relatively low levels of retirement savings, with one-quarter of working adults having no retirement savings at all, and nearly half having less than $25,000. This is a concerning trend as people are living longer and healthcare costs are on the rise.

The study’s authors suggest that giving to charity is admirable, but people should prioritize saving for their own future first, and find a balance between charitable giving and saving. They also hope that this research will prompt people to have more frank conversations about financial planning and retirement with their families.

This topic is important because retirement planning is crucial for individuals and the economy as a whole. With people living longer, it’s important that people have the means to support themselves in their later years. This study highlights the need for a more balanced approach to charitable giving and retirement savings.

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