As a result of the unprecedented financial turmoil the past two years, interest rates have remained stubbornly low. As a matter of fact they are hovering at historic lows. As of the writing of this column the 10 year US Treasury bond is showing a yield lower than 3 percent, and longer term high grade corporate bonds are offering just about 4 percent. Bank certificates of deposit are paying under 3 percent. This is a double-edged sword. For savers, investors, and retirees depending on income from their investments to maintain lifestyles, the low interest rates create many challenges.
In this type of environment retirees or other fixed income investors have to look at either reducing expenses or assuming more risk in the hopes that their returns will be greater. Jewish National Fund may have a solution that not only can increase income but support Israel and our life-sustaining projects as well.
As many of our donors know, JNF has one of the most successful Charitable Gift Annuity programs in the country. We believe our success is due to the fact we offer very competitive annuity rates and that our donors enjoy the stability of receiving a steady income check — all with the knowledge that their annuity gift will ultimately support Jewish National Fund projects in Israel.
A JNF Charitable Gift Annuity is a simple agreement that offers a lifetime income in exchange for a charitable gift to JNF. In addition to the income there are valuable tax advantages such as tax-free income, an income tax deduction, and the avoidance of lump sum capital gains taxes if the donation is made with long-term appreciated stocks or mutual funds. Our annuities can be structured to cover one or two lives and can even be designed to act like a supplemental retirement plan by deferring income for a number of years.
Here is a sampling of the single life annuity rates we currently offer:
Age 60 5.7 percent
Age 65 6.0 percent
Age 70 6.5 percent
Age 75 7.1 percent
Age 80 8.0 percent
Age 85 9.5 percent
Age 90 + 11.3 percent
Let’s look at an example:
Ellen is 72 years old with a $50,000 bank certificate coming due in the next month. Her bank has offered her a renewal rate for 5 years of 2.88 percent. It represents almost a 40-percent decline in income. As a supporter of Jewish National Fund, she has been receiving regular updates from our planned giving department about the gift annuity program and is ready to make an inquiry. A simple phone call provided her with the following information.
- At her age we can offer her an annuity with an income of 6.7 percent vs. 2.88 percent.
- Her $50,000 gift would pay annual income of $3,350 vs. $1,440.
- Her gift makes her eligible to claim a tax deduction of $16,820, saving her $5,887 in federal income taxes.
- $2,290 or 68 percent of the income will be paid to her as tax free income over her actuarial life expectancy of 14.5 years. After 14.5 years all of the income she receives will be considered as taxable income.
- Her gift will ultimately be used to fund maintenance and upkeep for the Sderot Indoor Recreational Center she visited on her last President’s Council Mission.
When Ellen looked at the increased income and tax benefits, she saw that she can help herself and support Jewish National Fund at the same time.
To receive information including a detailed illustration on how a Jewish National Fund Charitable Gift Annuity might benefit you, please call (800) 562-7526.