Three Times When You Should Sell Your Structured Settlement


Selling your annuity

Do you receive annuity payments from winning the lottery, a lawsuit settlement, or that you inherited from a deceased family member? A structured annuity settlement is a fixed payment that is made to the you on a regular basis (usually monthly or annually) to provide for your needs after an injury, retirement, or for lottery winnings.

While everyone likes having a little extra cash flow in their budget, sometimes it makes more sense for you and your family to sell fixed annuity payments and use the lump sum to improve your overall financial health. The average value of a structured settlement is $324,000; as with any asset of that value, the decision to maintain or sell fixed annuity settlements is something you should not take lightly. Of those who decide to sell fixed annuity settlements for a large cash lump sum, some of the reasons that made it beneficial include:

  1. When inflation eats into the total value of the annuity. As a rule of thumb, inflation increases the cost of living by about 3% each year. Let’s say you inherited an annuity that your dear grandmother purchased in 1965. In 1965, a household income was $6,450, a gallon of gas was .31 and a loaf of bread was .21. The chances are, the payment you’re getting might have seemed like a fortune in 1965, but now it doesn’t get you very far. If you continue to ride out the payments, inflation will continue growing and make each payment stretch a little less.

  2. When your mounting debt is burying you alive. It’s a sad truth that medical debt from an unexpected crisis can often ruin the financial well-being of otherwise responsible families. Over 60% of bankruptcies are a result of medical debt. If you have more debt than you can possibly pay, sometimes the finance charges, late fees, and other penalties that are piled on top of your debt every month are costing so much more than your annuity grows. By getting cash for your structured settlement, you can get out of the suffocating burden of debt and find a fresh start for you and your family.
  3. When you can put the money to better use. As the saying goes, “You need money to make money.” You could continue getting a small fixed annuity payment every month, or you could take the lump sum and turn it into a real money maker. Some people use the money from selling their structured settlement to start or grow their own business, that will make them multiples of cash over the value of their annuity. Some people invest in their future by selling their fixed annuity to go to school and earn a degree that will provide for themselves and their family for long after the fixed annuity payments would have stopped coming in.

Do you have a fixed annuity that you are interested in selling? What are you planning to use the cash for? Or have you already sold your fixed annuity? Are you glad you did it? We want to hear all of your input in the comment section below!

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