For retirees, the current low interest rates make planning for retirement income a little harder than it used to be. Even as the U.S. Federal Reserve continues to evaluate the rates, their changes are incremental.
Despite this environment, people are still retiring and finding different ways to get retirement income than they may have planned before the recession. Popular retirement choices that rely on interest to generate income – such as certificates of deposit – are less than helpful when rates are so low. Instead, retirees are turning to other options that can help give them the comfort and stability they need.
As with most retirement plans, look for a mix of income sources. When I have clients planning for retirement who know they want to leave gifts to charity, I tell them about options that can help them give to their favorite charities and also receive payments in retirement, such as:
- Charitable gift annuities – Make a gift of cash or marketable securities designated to the charities of your choice. You’ll receive regular annuity payments at a fixed rate for the rest of your life. Upon your death, the remainder of the gift annuity is distributed to the charities you specified.
- Charitable remainder unitrusts – If you have assets other than cash or securities, this may be a good option. Gift the asset and a buyer will be arranged for the asset. You’ll receive a lifetime income based on an agreed-upon rate established when the trust is signed.
Retirees who know they want to make charitable donations may find these options helpful as they look for the right mix of retirement income sources.
Ben Sprunger, ChFC®, is a Financial Advisor in the Everence office in Berne, Indiana.