If you are currently receiving a structured settlement annuity either because you won the lottery, a lawsuit or through a life insurance payout, you need to decide if you want to keep collecting the money monthly or if you would rather get cash for your settlement. There are a number of factors that go into making this decision regardless of whether you received $150,000 from an employer, are getting part of the over $3.5 billion paid out in medical malpractice suits in 2013, or you won $1 million in the lottery.
When you choose an immediate annuity, you can usually get your money is about a month. However, you have to choose the right one in order to offset the amount you will be charged in fees and taxes. For example, if you are under the age of 59 1/2, then your annuity will be charged 10% for early withdrawal. However, if you choose to wait to withdraw the funds, you must begin receiving payments by the time you are 70 1/2.
In addition, annual fees can be anywhere from 2% to 7% on top of the taxes that need to be paid. Taxes are usually between 25% and 35% depending upon your tax bracket, but cannot exceed 35% of the annual income, regardless of the amount of money made. This may be why almost 50% of lottery winners are still working and why nearly 70% of all lottery winners lose their money in five years or less, regardless if the amount of money they won was $500 million or $1 million. One of the best ways to determine what is right for you and your money is to use a special sell structured settlement calculator.
Once you sell your structured settlements, you are free to do whatever you want with the money. You can use it to get out of debt, buy a car or pay off your mortgage. However, if you do not want to spend the money from your structured settlement annuity all at once, there is another option. Another way to keep your structured settlement annuity safe is by turning into a deferred annuity rather than getting the money right away. While these are low risk, you do have to wait for 15 to 20- years in order to withdraw funds. However, the rate of return greatly exceeds other low-risk options. For example, if a 60-year-old man has a $100,000 deferred annuity and waits until he is 85 years old to collect, then he is guaranteed $4,000 a month in income.