Investing in What You Love

by Kate Colby

I recently chose Arden Wood as the provider of a charitable gift annuity. Having served on the boards of two smaller Christian Science nursing homes and as an interim facility administrator, I have always valued all the love and healing care these homes provide to the Christian Science community.

My earliest visits to Arden Wood were in the 1980s, when I would book Rest and Study visits when attending the annual Apple MacIntosh Conventions in San Francisco. At another time, I was blessed by a Rest and Study stay during which I experienced a needed healing while listening to a metaphysical lecture piped into my room. Fond memories, a peace-filled facility, caring and attentive staff, beautiful grounds and a supportive healing environment: What's not to love and value and support?

It can be tough today for seniors to find any niches where they can safely position their retirement funds. Returns on conservative income vehicles, such as treasuries, corporate bonds, CDs and money markets, are close to zero. Given the pandemic-disrupted economy, these meager returns are likely to remain very low for years to come. If one still needs to generate a retirement income stream, there are few low-risk options.

A strong, positive cash flow is still possible through investment in immediate income lifetime annuities. Returns for different investors will vary, as they are calculated based on one's age. If one is 75, an annual payout rate would be approximately 6%. While some of this payout is a return of principal, a portion of the return is interest. So, you can generate a dependable, known income stream for the remainder of your life.

You won't pay income taxes on the return of principal, only on the smaller interest portion of your payouts. There are variants of these annuities, which can include an additional income beneficiary on the policy or a deferment of income to later years in one's life. You can also buy a lifetime annuity from a traditional life insurance company, which will reap some remainder benefits when you leave this sphere.

But I have found a better way to use these annuities as an investment tool— investing in what I love and benefiting a favorite charity, like Arden Wood. This gift annuity also provides a lifetime income stream. Only charities of a certain size and scale, like Arden Wood, may be set up to offer, process and guarantee service on such annuities.

Whenever I move on from this earthly experience, I know that any remainder of my investment will go directly to Arden Wood. So I have preselected a "favorite charity" as my beneficiary. I have pre-adopted them into my final distributions without needing the specifics of a will or trust to so designate them.

Another huge benefit to this investment is a sizable tax write-off in the year of the annuity purchase. That write-off may be as much as 40% of the total annuity contract. If you don't need the total write-off in the year of your purchase, a portion of it can be rolled forward to future tax years.

This whole scenario seems a clear win-win—for me, it's investing in what I love, and for Arden Wood, it's being the recipient of my charitable giving. When I purchase a charitable gift annuity, I also like to send along a cash gift, such as 80% allocated to the annuity and 20% cash. I do this knowing the charity will not reap any benefits from my gift annuity until I depart this world. And I don't want them to have to wait that long for a deserved blessing!

To learn more about charitable gift annuities as an income source and investment in Arden Wood, contact John W. Mitchell at (415) 379-2200 or jmitchell@ardenwood.org.