How to Tithe in Retirement: The Ultimate Guide + Free Worksheet

By: One Degree Advisors


Tithing is a biblical commandment that most Christians wish to follow. However, most retirees are unsure how to tithe in retirement.

This commandment is relatively straightforward while you’re working because it’s easy to calculate.

Once you’re retired and rely on Social Security, a pension, or your investment portfolio, the calculation is not so black and white.

How to tithe in retirement may require more thought; however, this article will help you develop a simple plan which can alleviate concerns.

This guide will cover:

  • The Biblical Basis to Tithe in Retirement
  • The Unique Challenges of Calculating a Tithe in Retirement on Various Income Sources
  • 5 Common Income Sources For Those Who Tithe in Retirement
  • 2 Options for Calculating an Appropriate Tithe in Retirement
  • 3 Powerful and Tax-Efficient Ways to Tithe in Retirement
  • Free Worksheet to Help You Tithe in Retirement

The Biblical Basis to Tithe in Retirement

Before diving into how to tithe in retirement, summarizing the biblical foundation for tithing is important.

Tithing is an act of worship that demonstrates trust and obedience to God. Key biblical verses to study include, Genesis 14:20, Hebrews 7:4-10, Leviticus 27:30-32, Luke 11:42, and Malachi 3:8-10.

The practice of tithing, as introduced in Genesis 14 precedes God’s law given to Moses to guide Israel. Hebrews 7 of the New Testament refers to the event of Abraham tithing to the Priest and King, Melchizedek.

Jesus refers to tithing in Luke 11:42, admonishing the religious leaders who are meticulously calculating their tithe while neglecting love, mercy, and compassion.

This article by the Gospel Coalition neatly summarizes the purposes and reasons for tithing.

Anthony Saffer, CEO of One Degree Advisors, wrote a blog post called, Why I Tithe to My Church, which may also help solidify purposes for tithing.

The Unique Challenges of Calculating a Tithe in Retirement on Various Income Sources

Tithing (which literally means a “tenth”) is often simple to calculate from working income. If someone earns $10,000, a tenth would be $1,000.

You may question whether you should calculate the tithe from gross (before-tax) or net (after-tax) income. You’ll need to make this personal decision; although, the “first fruits” principle (Leviticus 23:10, 2 Chronicles 31:5), would seem to support tithing prior to paying the government.

In either case, this is an easy calculation by applying 10% to an income amount.

Many retirees, choose to tithe similarly to how they did in their working years. They simply tithe on whatever income they receive. As we’ll discuss in the next section, this can be a simple solution.

Questions often arise among retirees about how to tithe in retirement. This is usually because income sources can vary in timing and composition.

Specifically, many retirement income sources feature some return of principal (contributions) combined with growth or earnings. This feature is not common during working years.

5 Common Income Sources For Those Who Tithe in Retirement

Let’s look at common retirement income sources that feature a return of principal and how this can cause confusion when you tithe in retirement:

1. Social Security:

During your working years, you pay payroll taxes into Social Security to receive an income stream in retirement.

A benefits statement obtained from the Social Security Administration website lists how much you have paid into Social Security during your working years.

Should you tithe (again) on the return of principal with each payment?

2. Pensions:

If your employer’s pension plan pays you a retirement income stream, similar considerations to Social Security apply.

In this case, you would need to see how much, if any, you contributed to your benefit.

3. Retirement accounts:

Let’s assume a retiree owns an IRA valued at $1,000,000. ($250,000 of principal and $750,000 of growth)

Many years of working income contributed to the $250,000 of principal.

Should you tithe (again) on this principal amount when withdrawals are made?

4. Brokerage investment accounts:

The government taxes most dividends, interest, and capital gains as yearly income. Some retirees may choose to tithe on this taxable income since it shows up on their tax return.

However, the dividends, interest, and capital gains that investment accounts earn usually stay inside the account until later distribution.

Should you tithe on the earnings not yet distributed? What about tax-free income that doesn’t show up on the tax return?

You could also treat this type of account like an IRA, considering it has both a principal component (what you contribute) and earnings growth.

5. Rental property income:

Expenses are generally ongoing with real estate even while earning rental income.

Should you tithe from the gross rents received or from the net rents received after paying expenses?

Additionally, a sale of the property would produce consideration of a tithe, likely calculated on the gain above the purchase price.

Now, let’s look at options to address the question of how to tithe in retirement.

2 Options for Calculating an Appropriate Tithe in Retirement

Before personally deciding how to tithe in retirement, it can be helpful to note your priorities.

Are you aiming to keep things simple? Are you willing to apply more detailed calculations to minimize tithing on the principal?

Let’s explore two options.

1. Tithe on Total Received Income (The Simple Solution)

In this option you tithe off the income that is deposited into your bank account and any tax-withheld money. (Or, only what hits your bank account if you choose to tithe off the “net.”)

This is the simplest method.

Let’s look at an example:

Mary is retired and wants to continue tithing to her local church. Every month she receives $2,500 from Social Security and $3,500 from her IRA directly into her bank account. She has $1,000 withheld from her IRA income for Federal and State taxes each month.

She chooses to tithe off her gross income. Her monthly tithe is $700. ([$2,500 + $3,500 + $1,000] * 10%)

Tithing off total received income will result in a larger tithe than subtracting any return of principal as it does not delineate principal from earnings.

Choose this option if you aim to tithe faithfully from a generous and cheerful heart without the hassle of math.

You may be “re-tithing” on principal, but perhaps it does not matter if you believe you are making an impact with your giving and you prioritize simplicity.

Of course, you may be trying to make ends meet but still want to be faithful in your tithe. Option #2 could make sense.

2. Tithe on Growth but Not Principal

In this option, a retiree tithes only on the growth and not the principal, because they already tithed on the principal.

Because each income source, such as IRA, Social Security, or pension, differs in composition, you must calculate each source separately.

You can download the complimentary resource at the end of the article for additional help.

Going back to our example with Mary:

Let’s say Mary wants to continue tithing, but she only wants to tithe off her growth, not the principal. She determines that calculating the principal in her Social Security income is too cumbersome but calculating the principal in her IRA income is easy enough.

Mary discovers that of her $1,000,000 IRA account, $250,000 is principal and $750,000 is growth. So, 25% of her account is principal and 75% is growth.


tithe off my IRA in retirement

From each IRA withdrawal of $4,500 (Mary chooses to tithe off her gross income), $3,375 (75%) is tithed off of.

Her tithe is $587.50 per month. ([$2,500 * 10%] + [$3,375 * 10%])

Some people will choose to recalculate the percentage of principal and growth every year or every few years because the market value (namely growth) will change. However, others may stick with their percentage allocation from the start of their retirement to the end.

For lifetime fixed income sources such as Social Security or a Pension, the calculation may be more challenging. While you may know how much you have contributed, you don’t know how much you will receive over your lifetime. How long you live plus cost-of-living adjustments will vary the total income amount.

With fixed income sources, some will simply tithe the gross income amount. Others will apply their best estimate of a percentage.

3 Powerful and Tax-Efficient Ways to Tithe in Retirement

Writing a check or arranging a bank debit to your church are simple and common ways to tithe. However, most retirees are missing out on huge tax savings by not understanding simple yet powerful tithing strategies.

A cheerful giver doesn’t tithe simply to receive tax breaks, but a wise and thoughtful giver knows how to tithe while simultaneously paying the least tax possible.

1. “Stacking” Your Tithe in Retirement

Did you know that far fewer taxpayers are receiving tax deductions for their tithing? You may belong to the group affected by the change which occurred in 2018.

According to CNBC,

“In all, 16.7 million households claimed itemized deductions on their 2018 income tax returns, according to data from the IRS. That’s down from 46.2 million taxpayers during the 2017 tax year. The decline is the result of the Tax Cuts and Jobs Act, the overhaul of the tax code that went into effect in 2018.”

Specific to charitable giving, CNBC reports,

“Just short of 14 million households took a write-off for making charitable contributions during the 2018 tax year, the IRS found. That’s down from 36.8 million taxpayers in 2017.”

When filing taxes, you have a choice to make: Itemize Deductions or take the Standard Deduction.

  • Itemized Deductions include things like state and local income taxes, charitable contributions and tithing, mortgage interest, and medical expenses above certain limits, just to name a few.
  • The Standard Deduction is a specific dollar amount that everyone receives based on their filing status.

The Tax Cuts and Jobs Act (TCJA) increased the Standard Deduction, making it more advantageous for many households to take the Standard Deduction rather than itemize their deductions.

The good news is that more taxpayers took the Standard Deduction because it was better for them than itemizing deductions. The bad news is a lot of people didn’t receive additional Federal tax benefits for their tithing.

The concept of “stacking” your tithe in retirement is this: Do two years of tithing in one tax year to “supersize” your Itemized Deductions. In the second year, take the “higher” Standard Deduction. Then, repeat the every-other-year strategy as it makes sense. We posted a previous blog on “How Charitable Stacking Can Benefit You” for more on the strategy.

Let’s look at the math behind “Stacking” your tithe in retirement and how to implement it.

The Math of “Stacking” Your Tithe in Retirement

Depending on your tax situation, stacking multiple years of tithing into one year may push your Itemized Deductions high enough to take advantage of the deduction.

stacking your giving when you tithe in retirement  

With “Normal Tithing” the taxpayer would consistently take the Standard Deduction. In essence, they do not receive a Federal tax benefit for their tithing.

Under the “Stacked” approach, every other year the taxpayer would itemize and receive an additional $8,000 of deductions, potentially resulting in thousands of dollars in taxes saved.

Remember, the question is not simply if you are itemizing your deductions or not. Many taxpayers are still itemizing but the sum of their deductions is only slightly higher than the Standard Deduction. In this case, the marginal benefit of those deductions is small. The “stacking” strategy can still make sense in this case.

How to Implement Retirement Tithe “Stacking”

Upon learning about the retirement tithe “stacking” strategy, people often have two concerns.

Concern #1: “We don’t want to give our church an extra year’s worth of tithing all at once.”

A Donor-Advised Fund (DAF) can help alleviate this concern. A DAF can allow you to contribute your money into a “charitable account” and receive the full tax deduction. Once the money is inside of the DAF, you can distribute the money to your church or charity over time as you choose.

Let’s look at an example:

Joe and Sally tithe $1,000 a month to their church. Based on current tax laws, they do not receive any additional Federal tax benefit for their giving.

Together, they decide to open a DAF and contribute $24,000, which is two years’ worth of tithing.

They will then distribute $1,000 a month out of the DAF to their church for the next two years.

In the year they added $24,000 into the DAF, they will report the $24,000 donation on their tax return as a deduction.

The next year, they will take the higher Standard Deduction.

You can learn more about DAF’s through the National Christian Foundation and Nerd Wallet’s “What Is a Donor-Advised Fund, and How Does It Work?”

Concern #2: “How do we come up with an extra year’s worth of tithing at one time?”

Some people will dip into savings to fund the extra tithe. Others will take a few years to “save up” that extra year of tithing.

But there is another way, which can add another tax benefit that we will discuss below.

2. Using Appreciated Stock to Tithe in Retirement

If you buy a stock at $10 per share and sell it later for $15 per share, this will create a capital gains tax, assuming you purchased the stock outside of a tax-deferred retirement plan.

Often people will sell their stock or other appreciated assets and then give the cash proceeds to charity. Usually, this occurs when people are taking a regular income from their investment portfolio and then tithing by check or bank debit to their church.

A church or charity, however, can avoid capital gains when selling appreciated assets based on their non-profit status. So, gifting appreciated shares directly to the church can avoid the capital gains tax and still accomplish the tithing objective.

Let’s look at an example:

Mark has $50,000 of XYZ stock. He bought the stock years ago for $15,000.

Mark would like to make a tithe of $50,000 to his church. If Mark sold his stock and gave the cash to his church, he would pay taxes on the $35,000 gain.

Instead, Mark could gift his XYZ stock directly to his church.

Upon receipt, the church (which is a 501(c)(3)) could sell the stock and pay $0 tax. Mark, because he never actually sold the stock, doesn’t pay any tax on the sale by the church and could report his $50,000 charitable contribution.

Giving appreciated shares can also help fund that “stacked” tithing year, as discussed in Strategy #1.

3. Tithe in Retirement with Qualified Charitable Distributions

A Qualified Charitable Distribution (QCD) is a gift directly from an IRA to a charity. This brief video discusses QCDs, including an example outlining how the tax savings can work.

To qualify for QCD’s, you must be age 70 ½ or older. For many retirees who are also taking Required Minimum Distributions (RMD) from their IRAs, utilizing the QCD strategy can save thousands of tax dollars.

Let’s take a look at an example:

Sue is over 70.5 and has a $2,000,000 IRA. Her current year RMD is $75,000. She would like to tithe $20,000 to her church.

If Sue took the $20,000 distribution from her IRA and gave the cash to her church, she would pay ordinary income tax on the distribution.

Instead, Sue could elect to give $20,000 directly to her church from her IRA via the QCD strategy.

Upon receipt, neither the church nor Sue pays any tax on the distribution. The $20,000 can be used toward satisfying her $75,000 RMD withdrawal requirement.

Traditional IRA distributions are taxable income assuming you received the typical tax deduction when contributing.

Similar to selling stock and then giving the proceeds to charity, many retirees withdraw income from their IRA and then give to charity, paying unnecessary tax.

Although you do not receive a tax deduction for money given via the QCD strategy, it’s often more beneficial to avoid paying tax on the withdrawal rather than taking a withdrawal, paying tax, and receiving a corresponding deduction. IRA withdrawals can impact other things like higher Medicare premiums, which are discussed in this video.

As with all these strategies, consult your tax and financial advisors for the specifics related to your unique situation.

Summary of How to Tithe in Retirement

How to tithe in retirement may be a challenging determination compared to your working years.

Having the right plan in place can provide confidence and help you pay as little tax as possible.

In this article, we have covered,

  • The Biblical Basis to Tithe in Retirement
  • The Unique Challenges of Calculating a Tithe in Retirement on Various Income Sources
  • 5 Common Income Sources For Those Who Tithe in Retirement
  • 2 Options for Calculating an Appropriate Tithe in Retirement
  • 3 Powerful and Tax-Efficient Ways to Tithe in Retirement
  • Free Worksheet to Help You Tithe in Retirement

At One Degree Advisors, we help families make an impact with their wealth while living confidently in retirement. If you would like to see how we may be able to help you, schedule a complimentary 15-minute call.

“Yours, O Lord, is the greatness and the power and the glory and the victory and the majesty, indeed everything that is in the heavens and the earth; Yours is the dominion, O Lord, and You exalt Yourself as head over all. Both riches and honor come from You, and You rule over all, and in Your hand is power and might; and it lies in Your hand to make great and to strengthen everyone. Now therefore, our God, we thank You, and praise Your glorious name.” 1 Chronicles 29:11-13

Free Worksheet to Help You Tithe in Retirement

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Free Worksheet to Help You Tithe in Retirement

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