When most people would be diligently putting money into their 401(k) plans, Harvey'71 and Cher Black Simer'71 found a way to increase their giving to Beloit College and save for retirement.
The Simers, who live in Minneapolis, Minn., are harnessing two powerful tools to achieve their financial goals: deferred gift annuities through Beloit College and an employer's generous matching gift program. By having an employer match their contributions to Beloit, the Simers are able to significantly increase their annual gift. And, with their deferred gift annuities they are able to benefit the College and enhance their retirement income.
It all began when Cher took a new job as marketing research manager at Wells Fargo Insurance Inc., a small division that provides insurance products for individual and small business customers of the financial giant. The company offers a generous matching gift program for employees' charitable giving. "We wanted to take full advantage of the matching program to benefit the College, but felt that I couldn't spare that much out of my budget," Cher says. "Then the College suggested that we think about deferred gift annuities."
Harvey, accounting manager for a Twin Cities printing business, started looking at the numbers. "The two things we were weighing were: do we give money to the College or do we put it in our retirement accounts?" Harvey says. "What we have come up with really is the best of all possible worlds."
Deferred gift annuities are a special type of annuity that provide a higher interest rate in return for delaying the start of lifetime payments. Even though you will not begin receiving your fixed payments until later, a charitable tax deduction is available immediately.
Each year since 2007, the Simers have created a $5,000 deferred gift annuity with the College and are postponing the start of lifelong annuity payments for seven years. They have locked in interest rates of 8 percent, 8.1 percent and 6.9 percent, respectively, and plan to create a new deferred annuity each year until Cher's retirement.
With each new gift annuity, the Simers direct a Wells Fargo matching gift to the Beloit Fund. "The matching gift is pretty magical to me," Cher says. "Because of very generous scholarships I received, Beloit made it possible for me to attend college, so I love the notion of giving more to Beloit, and I've also fallen in love with the gift annuities. This is a very comfortable arrangement for us."
Is a Gift Annuity Right for You?
You can see if your employer offers a matching gift program by clicking here. To learn how charitable gift annuities can fit into your philanthropic and retirement plans, contact Pam Prescott, Beloit College director of planned giving services.