Charitable Gift Annuities

Income is important for retirees, of course, and one way to earn a lifetime income for those of us who are charitably inclined is to consider a charitable gift annuity. As good as simply writing out a check to a worthy charity feels, there are other ways to give to charity that provide even more benefits to the donor than a tax deduction. One common arrangement is known as a charitable gift annuity, and here's what it accomplishes: You'll receive a partial charitable income tax deduction, and the gift may reduce estate taxes. Also, if you donate appreciated securities, for example stocks that don't pay dividends, you won't have to pay capital gains taxes on them. Finally, and best of all, you receive a lifetime income. The percentage income depends on your age when you first begin to receive payments. The older you are when you make the contribution, the higher the payout rate.

Charitable gift annuities typically require a donation of at least $10,000, but they are an excellent way for the charitably inclined to boost their income. You can also arrange with your favorite strategy to make the contribution now (and receive a charitable deduction for a portion of your donation), but defer collecting the income until a later date. By doing so, you'll boost your income compared with collecting immediately upon making the contribution.