CHARITABLE Giving as Part of Retirement Planning

It may seem strange to think of giving away money while planning for retirement.  Most retirement planning is about accumulation of assets, not distribution.  However, some of the most visionary planning for retirement may include charitable giving.

A Deferred Payment Charitable Gift Annuity can be structured to provide future income at retirement while supporting your favorite charity, like Austin Grad, today.

Here is an example:  Let’s say that Bill is 45 years old and has begun to think about his retirement twenty years down the road.  He is taking advantage of his company benefits and is also saving some each month for investment in a mutual fund, a money market fund or a certificate of deposit.  His astute savings has resulted in a small nest egg of about $30,000.   Bill is charitable minded and would like to support Austin Grad but feels that his retirement planning is most important at this time.

Bill reads about something called a “Deferred Charitable Gift Annuity.”  He is interested in knowing more and asks for more specific information.  Here is what he learns.

If Bill were to give $10,000 from his savings to Austin Grad in return for an immediate Charitable Gift Annuity, he would receive 3.3% or $330 per year.  While this may be similar to the return he is getting from his investments, by taking a visionary approach and deferring his annuity payments for 20 years when he is 65, he will receive $890 per year or 8.9%.

If Bill decides to do so, he will qualify for an income tax charitable deduction of approximately $1,100 on this year’s income tax return.

Moreover, when Bill begins to draw his annuity at age 65, $447 of the $890 will be tax-free.  Only $443 will be reportable as ordinary income.

How does this benefit Austin Grad?  When Bill makes his gift, Austin Grad will have use of the $10,000 for 20 years before the annuity payments begin. Wise investment will assure funds for Bill’s annuity at retirement and will support Austin Grad’s mission for many years to come.

Through visionary planning, Bill has accomplished both of his goals.  He has supplemented his future retirement income while making a substantial gift to Austin Grad.  Bill can request that the gift portion of his Deferred Payment Charitable Gift Annuity be used to provide scholarship support for students, help build up the Austin Grad Permanent Endowment Fund or simply be used for general operations of the school.

Why not consider a Deferred Payment Charitable Gift Annuity as part of your retirement plan?  We will be happy to provide you with specific information without obligation.  Contact Neil Haney in the Austin Grad Development Office

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