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Alumni Example of Flexible Deferred Gift Annuities

Syd and Mary Tate ’57

Mary Tate '57

Syd and Mary Tate were interested in making a substantial gift to Whitman, although they were not sure if they might need the asset later in retirement. They first considered establishing an immediate gift annuity with a 5.9 percent rate. Since they were already comfortable with their current retirement income, the Tates worked with the planned giving office to investigate the results of deferring the annuity for about three years.

By waiting three years, the annuity rate increased to 7.6 percent and they could still choose to defer the payments longer and receive an even greater income. If they do not need the income for ten years, and then choose to commence the annuity payments, their payout rate will be 12.2 percent. The flexibility of the annuity will provide the Tates with a reserve to provide a substantial increase in their income should they need it in the future and there is no requirement that they ever start the annuity payments. The flexible deferred gift annuity allowed the Tates to make a gift to Whitman now and still have the comfort of knowing they have a guaranteed income in the future.

Julie Gaisford ’65

Julie Gaisford '65

With her 40th reunion approaching, Julie Gaisford wanted to make a special gift to support her class and Whitman College. Julie contacted Whitman to talk about options to consider for her reunion gift. As it turned out, she owned Microsoft stock with a low cost basis that she had planned to retain to potentially help fund her retirement. Alternatively, the stock could be used to provide funding for a flexible deferred gift annuity.

The structure of the flexible deferred gift annuity allowed Julie to accomplish both of her goals; planning for retirement and supporting Whitman. She was able to transfer the stock to make a gift to Whitman as part of her 40th reunion and establish an annuity that is targeted to commence payments when she plans to retire. Because Julie will also have the right to defer her income further each year, if Julie does not need the extra income from the annuity she can hold the payments in reserve for later. The deferral of payments will result in a much higher payout rate for Julie. Instead of a current annuity rate of 5.9 percent, the 8 year deferral will result in 9.5 percent payout rate at her first option to begin payments. Each additional year that Julie continues to defer her annuity payment will result in an additional increase to her payout rate.

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