Craig Wear, CFP®Craig Wear, CFP® | Expert in Roth Conversions & Tax-Efficient Retirement Strategies for IRA Millionaires

The Secret to Offsetting Retirement Income Spikes

20 Mar 2026 · 1 min

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In this segment, Craig Wear, CFP®, explains how donor‑advised funds (DAFs) can be used as a tax‑efficient charitable giving strategy for retirees facing large, irregular income spikes such as proceeds from a business sale or a sizable Roth conversion. He describes a DAF as a "charitable savings account" where contributions generate an immediate tax deduction, while the actual charitable grants can be distributed over many years. By "bunching" several years of charitable giving into the high‑income year, retirees can offset the spike, claim a larger deduction, and then spread the charitable impact over a 5‑ to 15‑year horizon, providing both tax relief and long‑term flexibility.

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If you give significantly to charity or you want more flexibility, this is where donor-advised funds come in. A donor-advised fund, or DAF, is like a charitable savings account. You contribute money, you get the tax deduction in the year you contribute, then you distribute grants to charities out of a checkbook over time. This is powerful in high-income years. You sell a business, or maybe you have a large Roth conversion where you sell real estate, your income spikes. If you're already generous, you can bunch several years of giving into one year. Fund the DAF, take the big deduction, offset that income spike, then distribute to charities over the next 5, 10, 15 years, however you want to.