American Church Group - Colorado

Why Some Churches are Rethinking their Financial Planning

By Jordan Isaacson, Ministry Insurance Specialist

In the ever-changing realm of finances, the past few years have brought forth a whirlwind of alterations. Looking ahead, the next five years promise their fair share of surprises and uncertainties. Amidst this backdrop, a trend has emerged – churches are showing a keen interest in MYGA annuities. These annuities have caught their attention due to their potential to offer stability and security for investments, a vital factor for preserving and growing church funds. The unpredictability of markets, economic fluctuations, and the need for steady income have underscored the importance of seeking out financial instruments that provide a balance of reliability and growth. The beacon of promise in the current scenario is the Multi-Year Guaranteed Annuity (MYGA). Let's delve into why this is a propitious moment for churches to consider MYGA annuities as a strategic investment avenue.

As of now, while penning down these thoughts, the present guaranteed interest rate stands as high as 5.3% for a span of 5 years. This signifies that if, for instance, an amount like $400,000 is earmarked for protection and growth, an assured return of $21,200 annually for 5 years can be secured. And it's worth noting that this figure climbs even higher if the interest isn't withdrawn, allowing it to compound over time.

So, what precisely is a MYGA annuity and what should churches be aware of? Let's break it down: A Multi-Year Guaranteed Annuity (MYGA) is a type of insurance arrangement that promises a fixed rate of return over a specified period, typically ranging from 3 to 10 years. MYGA annuities provide investors with predictable earnings, akin to certificates of deposit (CDs) or bonds. However, they present an added advantage of tax deferral on earned interest until withdrawals are initiated.

The rationale behind MYGA Annuities for Churches:

1. Stability and Predictability: Given the current volatility in financial markets, churches are often prioritizing stability over aggressive expansion. MYGA annuities offer an unchanging fixed interest rate throughout the contract's duration, thereby ensuring a predictable income source that's unaffected by market fluctuations.
2. Consistent Income: Churches depend on a steady stream of revenue to sustain their operations, ministries, and community endeavors. MYGA annuities can supply regular interest payments, lending churches the confidence to meet their financial commitments consistently.
3. Principal Protection: Church funds are the culmination of years of effort and dedication. MYGA annuities come with a guarantee that the principal amount remains shielded from the impact of market downturns. This attribute of security holds immense appeal for institutions like churches.
4. Tax Advantages: For churches, the tax-deferred growth feature of MYGA annuities carries special significance. This aspect allows interest earned to accumulate over time without the burden of immediate taxation, which could potentially lead to greater overall returns.
5. Diversification: While churches often adopt a diverse investment strategy, MYGA annuities introduce an extra layer of diversification by contributing a fixed-income element to the portfolio. This helps mitigate risks tied to more aggressive investments.
6. Long-Term Planning: Churches are inherently driven by long-term objectives. Tailored to match the duration of specific projects or initiatives, MYGA annuities offer a dependable funding source for such endeavors.
7. Ease of Management: Managing MYGA annuities is notably straightforward, requiring minimal administrative involvement compared to other investment avenues. This simplicity proves especially advantageous for churches working within limited resource constraints.

In a nutshell, we find ourselves in a time marked by financial ambiguity. Churches are tasked with the mission of upholding fiscal steadiness while remaining dedicated to their purpose. This involves the responsible and prudent management of the funds entrusted to them. MYGA annuities present a remarkable opportunity to fulfill both these aims. By delivering a secure, foreseeable, and tax-advantaged investment channel, these annuities align seamlessly with the financial aspirations of churches. They offer a reliable source of income, safeguard the principal, and come with the potential for long-term planning benefits. It's important to stress that any investment decision should be taken after thorough contemplation and consultation. Given the prevailing financial milieu, now is indeed a wise moment for churches to explore the potential advantages that MYGA annuities can bring to their funds.

Feel free to contact us via call or email for more detailed information tailored to your church's unique situation