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Dependable Income for Retirement

By Jackie Jacobs

As financial markets go up and down with unpredictable speed, many seniors are turning to charitable gift annuities as a dependable source of lifetime income. They know they can count on receiving the same amount from the annuity, in regular installments every year from now on, and that’s a great comfort.

They like the other features, too … attractive rates (up to nine percent), payments that are partially tax-free, and the charitable deduction to claim on their income tax return. Most importantly, they like the fact that they are helping a good charitable cause.

EXAMPLE

Mr. and Mrs. Levine are 78 and 79 years old, respectively, when they give $40,000 to set up their charitable gift annuity. They annuity rate for their ages if 5.5 percent, which means they will receive $1,100 semi-annually, or $2,200 per year. (Note: Annuity rates vary, depending on the age of the annuitants. The Columbus Jewish Foundation uses rates currently recommended by the American Council on Gift Annuities.)

The Levines can count on getting these fixed payments for the rest of their lives. Even when one of them dies, the surviving spouse will continue to receive the same amount for life. Plus, the payments are backed by the full assets of the charity, so they can have confidence that their gift annuity payments will always be there for them.

What about you?

You don’t have to be married to obtain a gift annuity. Single-life annuities actually pay a higher rate, and the older a person or couple is, the higher the rate.

Once the charity knows your age and the gift amount you are considering, it should be able to prepare a personalized gift illustration. It should clearly show how much you will receive for the rest of your life; the payment schedule (quarterly, semi-annually, annually); what portion of the payments amounts will be tax-free; and the amount of your income tax charitable deduction. It should also indicate how it will benefit the charity in the future. Your tailor-made illustration can show you how a dependable charitable gift annuity will work for you. It could be an important part of your retirement plan.

Should you have questions about charitable gift annuities, feel free to contact me, without obligation, at 614-338-2365 or jjacobs@tcjf.org.

Jackie Jacobs is the Chief Executive Officer of the Columbus Jewish Foundation, the Central Ohio Jewish community’s planned giving and endowment headquarters.

Article appears as originally published in the Ohio Jewish Chronicle March 19, 2015.

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