March 7
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Charitable Gift Annuities (CGAs) have been around for a long time. This gift vehicle is a simple way for philanthropists to donate to a cause they care about. And in recent years, we’ve only seen them become more popular than ever . Read on to discover why CGAs are having a moment and why you should make them part of your charitable giving strategy.
Why Charitable Gift Annuities Are a Popular Investment Option
Payout Rates Are At All-Time Highs
Each year, the American Council on Gift Annuities sets a payout rate based on economic and market conditions. Since there’s been record-high inflation the last couple of years, annual payout rates have increased to an average of 5.75% per year. Right now is the perfect time to invest and maximize your yearly annuity.
Fixed Annual Payments for Life
Something that draws many potential philanthropists is the idea of having a fixed income stream for life. For example, if you decide to invest $500,000 at age 70, you’d be eligible for an annuity rate of 6.4%, roughly $31,500. This extra guaranteed passive income would help you better manage your expenses, especially after retirement.
You’ll Save on Taxes
Aside from stability, CGAs offer key tax advantages over other plans. The IRS allows you to claim a charitable gift as a tax deduction. The deduction is equal to your contribution’s amount, minus the value of the total annuities you’ll receive for the remainder of your life.
Let’s say you donated $50,000 at 65. With the current payout rate of 5.7% based on your age, you’d receive $2,850 each year. Using the IRS’s 5.4% discount rate, the current value of these annuity payments over 20 years amounts to $35,059. This comes out to a charitable deduction of $14,941 in taxes.
A tax deduction like this significantly reduces your taxable income the year you donate, saving you thousands.
You Can Leave a Valuable Legacy
Beyond the financial benefits, CGAs give you an easy path to support causes you care about. Any remaining funds will go directly to a charitable organization that will make a difference in your community once you pass away. It’s a simple yet effective way to leave your mark in the world for years to come.
Don’t Miss Out on This Opportunity
Are you looking for a way to optimize your retirement strategy while giving back to your community? Consider funding a CGA for Long Island Cares. Together, we can feed thousands of hungry families in need. Don’t miss out on the opportunity to make a lasting impact. Contact us at 631-582-FOOD to learn more about our organization.