First United Methodist Church - Lancaster Pa

 

A charitable gift annuity provides lifetime income and supports First Church

                     by Sarah Young Fisher

 

        Is the decline of interest rates making it more difficult to meet your current expenses?  With the price of oil currently over $1.20/barrel forcing $3.50 for a gallon of gas and unthinkable heating prices next winter, seniors are searching to find ways to increase “income”.  Almost daily I receive calls from clients wanting to know if I have something better than a 3.5% rate for a Certificate of Deposit.

 

        Well, there is a tool that is good for you if you are 60 or older, and it ultimately benefits First Church.  It’s a Charitable Gift Annuity (CGA) which provides “income” during your lifetime, and usually yields substantial tax benefits.  But what is a CGA?

        To create a CGA, a giver agrees to donate cash, stock, or other assets worth at least $10,000 to First Church.  In return, the donor receives a fixed payment, called an annuity, for life.  This payment is usually made quarterly.  For this gift, there are tremendous income tax benefits (50% deduction for a gift of cash, 30% deduction for gift of stock or real estate).   The donation is irreversible and goes to First Church at the death of the donor.

        The older the donor, the higher the annuity payment the donor can lock in.  The current rates for a single life are the following:

        Age                Payment Rate

        60    5.7%

        65    6.0

        70    6.5

        75    7.1          

        80    8.0

        85    9.5

        90+ 11.3

 

Annuity payments for a couple are somewhat lower, since the payment continues for both lives.

         

        CGA’s are very simple to set up.  A page-and-a-half legal document—that's basically it! It's very streamlined and efficient.   You (for one person or two) can receive a lifetime income greater than a CD or bonds, with an income tax deduction to boot.

Payment Rates will change on July 1, 2008

 

        Annuity payment rates are reset annually.  Because interest rates have declined, new lower rates will go into effect on July 1, 2008.  For example, a single-life annuity rate is currently 8.0% for someone 80 years old.  That rate will drop to 7.6% on July 1.  So if this income option is of interest to you, it is important that you review it soon.

 

        If you are interested in setting up a Gift Annuity at this time or getting more information, please call Jim Wetzel (295-5729) or Sarah Young Fisher (399-1700) to discuss your unique situation.  Both are active with the Planned Giving Committee of First Church.