A 75-year-old widow uses a $720,000 charitable gift annuity to generate fixed lifetime payments and a $230,000–$250,000 tax deduction.
A 75-year-old retiree has locked in $50,400 in annual tax-advantaged income by funding a $720,000 Charitable Gift Annuity (CGA). The strategy provides fixed monthly payments of $4,200 while offering an immediate charitable tax deduction of $230,000 to $250,000.
Current IRS Section 7520 rates near 4.5% enhance the appeal of CGAs compared to commercial annuities, as they combine lifetime income with tax benefits. However, payments remain fixed and do not adjust for inflation. The approach also allows donors to leave a legacy gift to a nonprofit, such as a university.
The strategy addresses common retiree concerns: dependable income, tax reduction, and charitable giving. With $1.8 million in savings, the widow avoids complex financial management while achieving multiple financial goals in a single transaction.