Planning is the process of deciding on and arranging for something in advance. A particular difficulty in planning for retirement is knowing what you’re planning for: how much will you need? When will you need it? What if you work longer than expected and/or do not want additional income to kick in when you thought you might?

Given these unknowns, a key to good planning is diversity, not having all one’s eggs in one  basket. A deferred charitable gift annuity provides some interesting options to incorporate into your retirement basket. 

With an immediate payment annuity, the payments begin shortly after the contribution is made, depending on the frequency of payments chosen. With a deferred annuity, the start of payments is delayed at least one year–the longer the delay, the higher the annuity rate. 

With a deferred gift annuity, payments are set to begin at a fixed date in time. On that date, the payments start and continue on for the remainder of the annuitant’s life at a set annuity rate. However, there are variations on deferred annuities that can provide flexibility in addressing some of the questions above. One variation provides the annuitant the ability to set up a range of potential start dates for the annuity, rather than having to decide on the start date at the time the annuity is established. The later the payments are started, the larger they will be. This flexibility can help avoid payments commencing at a time when you do not need the additional income, but allow for starting a larger payment when it is needed.

This article appeared in The Heritage, Vol. 22 Number 3, 2020.