Charitable Gift Annuities: How to Support Causes While Receiving Lifetime Income

Planning for the future is more than just a practical necessity, it’s a reflection of your values. For those who want to secure their financial future while leaving a lasting legacy, Charitable Gift Annuities (CGAs) offer an elegant solution. These financial tools allow you to support the causes you care about most while ensuring a reliable income stream for life. Paired with a solid long-term care strategy, such as OneAmerica’s Asset Care and Annuity Care plans, personal savings, or government programs, CGAs can help you strike a balance between generosity and personal security.

If you’ve ever wondered how to make your money work for both you and the greater good, this guide will walk you through the ins and outs of charitable gift annuities, the role of a charitable gift planner, and how they fit into a broader plan for long-term care. Let’s dive in.

What Are Charitable Gift Annuities?

At its core, a charitable gift annuity is a contract between you and a nonprofit organization. You donate—typically a lump sum of cash, securities, or other assets and in return, the charity agrees to pay you (or you and a loved one) a fixed income for the rest of your life. After your lifetime, the remaining funds go to the charity to support its mission.

Think of it as a win-win: you get a dependable income stream, potential tax benefits, and the satisfaction of knowing your contribution will make a difference. For example, if you’re passionate about education, animal welfare, or medical research, a CGA lets you support those causes while keeping your finances intact.

The payout rate depends on factors like your age and the size of your gift. Generally, the older you are when you set up the annuity, the higher the payout rate. According to the American Council on Gift Annuities, a 70-year-old donor might receive an annual payout rate of around 5.7%, while an 85-year-old could see rates closer to 8.1%. These rates are fixed, meaning they won’t fluctuate with the market a big plus for anyone seeking stability in retirement.

Why Consider a Charitable Gift Annuity?

1. Lifetime Income: Unlike traditional investments that might ebb and flow, a CGA provides a predictable income you can count on.
2. Tax Advantages: When you fund a CGA, you may qualify for an immediate income tax deduction based on the charitable portion of your gift. Plus, part of your annuity payments might be tax-free.
3. Legacy Building: After your lifetime, the remainder of your gift supports a cause you care about, creating a lasting impact.
4. Simplicity: CGAs are straightforward to set up, especially with the guidance of a charitable gift planner, who can tailor the arrangement to your goals.

But here’s the catch: CGAs are just one piece of the puzzle. To truly secure your future, you’ll need to think about long-term care, because while charitable giving feels good, it’s equally important to ensure you’re covered as you age.

The Importance of Long-Term Care Planning

As we live longer, the need for long-term care, whether it’s in-home assistance, assisted living, or nursing home care, becomes a reality for many. According to the U.S. Department of Health and Human Services, about 70% of people over 65 will need some form of long-term care during their lives. The costs can be staggering: the median annual cost for a private room in a nursing home is over $100,000, and even in-home care can add up quickly.

Without a plan, these expenses could erode your savings and leave little for charitable giving or personal enjoyment. That’s where integrating CGAs with long-term care options comes into play. Let’s explore some of the most effective strategies.

Long-Term Care Options to Pair with CGAs

1. OneAmerica’s Asset Care and Annuity Care Plans

OneAmerica offers innovative solutions that combine long-term care coverage with annuities or life insurance. Their Asset Care plan, for instance, is a hybrid product that uses a life insurance policy with a long-term care rider. If you need care, funds are available to cover expenses; if you don’t, the policy provides a death benefit to your heirs. Similarly, Annuity Care leverages an annuity to fund long-term care, offering tax-deferred growth and flexible payouts.

These plans are ideal for someone setting up a charitable gift annuity because they protect your assets while ensuring you can still make a meaningful gift. A charitable gift planner can help you align these products with your CGA, maximizing both your income and your impact.

2. Personal Savings

Relying on savings alone for long-term care can be risky, especially if costs exceed your projections. However, savings can complement a CGA by covering smaller expenses or acting as a buffer. The key is to calculate how much you’ll need for care and how much you can comfortably donate to a CGA without jeopardizing your financial health.

3. Government Programs

Programs like Medicare and Medicaid offer some support, but they come with limitations. Medicare covers short-term skilled nursing care but not extended custodial care, while Medicaid kicks in only after you’ve depleted most of your assets. For many, these programs are a last resort. Pairing them with a CGA ensures you have income to supplement what government assistance doesn’t cover.

The Role of a Charitable Gift Planner

Navigating the world of CGAs and long-term care options can feel overwhelming, which is where a charitable gift planner becomes invaluable. These professionals specialize in helping donors design giving strategies that align with their financial and philanthropic goals. Here’s how they can assist:

• Customizing Your CGA: A planner will assess your age, income needs, and charitable priorities to recommend the right donation amount and payout structure.
• Integrating Long-Term Care: They can coordinate your CGA with plans like OneAmerica’s Asset Care or Annuity Care, ensuring your income and care needs are met.
• Maximizing Tax Benefits: By structuring your gift strategically, a planner can help you take full advantage of deductions and tax-free payments.
• Connecting with Charities: They’ll guide you to reputable organizations that offer CGAs and align with your values.

Think of a charitable gift planner as your financial and philanthropic quarterback—someone who brings all the pieces together into a cohesive game plan.

A Real-Life Example

Let’s say you’re a 72-year-old retiree named Susan with $200,000 in savings. You want to support a local animal shelter and ensure you’re prepared for future care needs. After consulting a charitable gift planner, Susan donates $100,000 to set up a CGA. Based on current rates, she receives $5,700 annually for life, a mix of taxable and tax-free income, plus a $40,000 tax deduction upfront.

To cover long-term care, Susan uses $50,000 of her remaining savings to fund a OneAmerica Asset Care policy, which provides $150,000 in long-term care benefits if needed. Her remaining $50,000 stays in savings for flexibility. This way, Susan enjoys a steady income, supports the shelter, and has peace of mind knowing her care is covered.

Getting Started with Charitable Gift Annuities

Ready to explore CGAs for yourself? Here’s a simple roadmap:

1. Define Your Goals: Decide how much income you need and which causes matter most to you.
2. Consult a Charitable Gift Planner: Find a professional through a financial advisor or directly via a charity you trust.
3. Evaluate Long-Term Care Options: Look into plans like OneAmerica’s offerings or assess your savings and government program eligibility.
4. Set Up Your CGA: Work with your planner and the charity to finalize the details.
5. Review Regularly: Life changes, so revisit your plan every few years to ensure it still fits.

Charitable gift annuities are a powerful tool for anyone who wants to blend financial security with philanthropy. They offer lifetime income, tax perks, and the chance to leave a legacy all while fitting seamlessly into a broader long-term care strategy. Whether you lean on OneAmerica’s Asset Care and Annuity Care plans, bolster your savings, or tap into government programs, the key is planning.

With the help of a charitable gift planner, you can craft a future that’s as generous as it is secure. Why not take the first step today? Your favorite cause—and your peace of mind—will thank you