A lot of people in the United States have structured settlements from lawsuits of lotteries. These are paid out over decades in lieu of giving them one lottery lump sum payout. For instance, people who win the Mega Millions lottery get one payment up front and then the rest is paid out over 29 years and each year they pay out 5% more than the year before it. Powerball has a similar plan, their payments go on for 30 years.
A lot of Americans receive payments from their structured settlements, more than 37,000 people receive these payments each year. In 2013, individual deferred annuities came to $2.58 trillion, this was for 34.8 million contracts. It’s clear that a lot of people have these and like them and live on them. These people enjoy the security that comes with a guaranteed income. But they are not for everyone.
There is an alternative to the structured settlements. People who have an annuity might want to consider selling it. It is possible to sell an annuity. There are companies that specialize in purchasing structured settlements.
Should I sell my structured settlement for cash?
This depends on where you are in your life and what you want to do with the money you are receiving. Companies who are adept at purchasing structured settlements list these are the things people have done with their payment from selling an annuity settlement.
Financed their education of that of their children. College is expensive and student loans are, too. You may not be able to get financial aid if you have an annuity. Student loan debt plagues many people in the U.S. and that number is only growing. From 2014 to 2015, the total amount due for these loans went from $1.21 trillion to $1.3 trillion and economists say having this debt hurts a person’s long term financial situation. The average family has at least $11,000 in student loan debt. Selling an annuity can help prevent you from having to take out a student loan.
Bought property. Houses are expensive. This is usually the biggest purchase a person will ever make. Most homebuyers have to put out 5, 10 or 20% of the house’s price and it has to be cash. As of 2010, the average house cost almost $273,000. Being able to buy a home outright without the need of a mortgage might be a better way for some people to use their annuities. The average American household is $70,000 for a mortgage.
Diversify their Portfolio: The cash from a structured settlement can be invested to create a more diverse portfolio that can increase in value the way a fixed annuity cannot. This may be a good option for people. Talking to someone experienced at purchasing structured settlements can help.
People who sell their structured settlement, on average, receive $324,000 for it. Now, it’s worth noting that selling one can cost up to 10% but finding a good company that’s knowledgeable about selling structured settlements will help with that. At least, they can guide a seller through the process and make it as smooth as possible.
Approximately 92% of the people who do sell their annuity report being happy they did so. The thing to do is research all your options and make the one that works for your life plans and goals.