All benefit when prudence is combined with a love of the church

By Travis Pearson
I really enjoy working with parishioners to help them realize their estate and retirement planning goals and their desire to support the church.
I’ve recently had the joy of working with a fellow who has taken steps to not only support the church, but also sensibly take advantage of tools providing him security in retirement, and substantial tax savings. Out of respect for his privacy, I’m not going to reveal his name. I am, though, going to reveal some of the very wise steps he has taken over the last couple years that both empower him and his church. Thus, I’ll refer to this sage chap as Mr. Wise.
Mr. Wise is in his late 60s, and has worked hard to put in place income streams to provide him security in retirement. He has done a fine job of combining the fruits of his own labor along with what will be provided by Social Security, to build himself multiple income streams for his retirement.
A couple years ago, he contacted me to discuss whether one of the tools the diocese offers might be able to benefit him as he heads into retirement. His goals were as follows: secure a guaranteed additional income stream for the rest of his life; capture a way to support the church; and harvest tax savings, if possible. It turns out the diocese does offer a tool than can do all three of these things. Mr. Wise and I began to work up the numbers on a deferred charitable gift annuity.
A charitable gift annuity is a tool by which one purchases either an immediate fixed annuity or a deferred fixed annuity through the diocese, and the annuity pays an income stream to them for the rest of the person’s life. The purchaser also receives a substantial tax deduction for setting up the annuity, a portion of the income stream is tax free, and any remaining dollars in the annuity at the person’s death is paid to the church.
It can be a powerful tool for those best suited for it. Mr. Wise, being in his late 60s, desired to defer the charitable gift annuity until the age of 72, which for him makes the tool even more powerful by increasing his rate of return a little over what an immediate annuity would provide, and he’s in good shape otherwise between now and then with his other planning in place.
Mr. Wise and I implemented that deferred annuity for him. Afterwards, he was so impressed with how well it achieved his goals, he decided to come back and implement two more of them. Mr. Wise has thus created three more guaranteed income streams for his retirement, on top of what he previously had in place, providing him peace of mind in retirement. In addition, he’s received substantial tax benefits, and for him, he was able to accomplish a gift to the Church which was very important to him. Oh, and his effective rate of return on his three deferred annuities? 7.25 percent, 7.2 percent, 7.47 percent for the three of them. Try getting that on a certificate of deposit (let alone the tax savings and the benefit to the church). Mr. Wise is wise indeed.
Stop by or give me a call and find out if using this approach may be a smart move for you, too.
Pearson is Planned Giving coordinator for the Diocese of Wichita.