Are Lottery Tickets The New Retirement Plan?!

By Bill Adolph, Director, Planned Giving Midwest


A recent article in USA Today stated that over 20% of Americans consider the chance to win the lottery as their retirement plan! I was stunned, but when you consider the low savings rate and concurrent high debts the average consumer carries, the only conclusion one might make is the lottery is my only way out.

Thankfully many Jewish National Fund donors have taken more prudent measures to ensure their retirement will be financially sound. From the uses of IRA, 401K Plans, and all the other retirement choices available there are ample tools to plan and secure a properly funded retirement. Winning the lottery wouldn’t hurt, though.

Many Jewish organizations can play a part in helping our donors with retirement ideas while they help support the myriad of causes that need financial support. There are many gift plans that can be used to supplement income and even retirement plans already in force.

One very unique idea that is ideal for retirement planning is a Flexible Gift Annuity. This is a form of charitable gift annuity that allows donors to make a gift to their favorite charity where they will receive income from the gift sometime in the future. The donor can choose amongst a range of dates as to when the income is needed most usually based on life circumstances. If the income is not needed the donor can elect to defer it. If circumstances change, however, the donor can elect to begin taking annuity payments sooner.

Let’s look at an example:

Joan and Louis are currently 55 and 57 years old. They both work and are taking full advantage of their company’ retirement plans and IRAs. They support JNF and have $25,000 to put away for future income.

The JNF Planned Giving Department was able to show Joan and Louis how to construct a Flexible Gift Annuity where the income would not start for a minimum of 7 years, Louis’s retirement age, but could be further deferred for a maximum of 13 years. By doing this, Joan and Louis guaranteed themselves a minimum annuity rate of 9.7% after 7 years, but if they choose to continue deferring payments they could earn up to 21%. In other words, they can elect to receive their income at the time when they need it the most based on their needs and desires.

Even though they are deferring their payments they still receive their tax deduction today. This allows them to save taxes when their earning power is at its highest and the tax savings are most valuable.

When everything has finished, the money Joan and Louis donated to their Flexible Gift Annuity will be used to fund various Jewish National Fund projects in the Negev.

Establishing a Charitable Gift Annuity is a way to receive current income. In this case, the amount you can receive is based on the age or ages of the income beneficiaries. The older you are the more income you receive. In most cases the rates are higher than some commercial investments and a portion of each payment can be tax-free. When you add the tax deduction to the equation the Charitable Gift Annuity can be an attractive fixed income alternative to bonds or Certificates.

For more detailed information call your favorite charity to see if they offer these plans, or call the Jewish National Fund. We will be happy to supply you with all the information you need to make an informed decision. JNF can be reached at 800-562-7526.

Now…where is that lottery ticket I bought last week???