How Do I Know If I Should Cash in My Annuity Benefits?


Selling lottery payments

Some decisions in life we regret. Buying that ridiculously expensive SUV three months after your first daughter was born might be at the top of your list. In fact, you may still have phantom pains in your back from the time you slipped of the high dollar running board when you were trying to get the car seat out of the middle seat in the second row. The baby was no worse for the wear, but every time that it rains or gets cold the pain in your back reminds you of the 10 days you spent recuperating in bed
While some decisions you spend your life regretting, other decisions, like cashing in on your structured settlement annuity benefits, will not be one of them. Financial choices often seem complicated, but if you and your family are living paycheck to paycheck or barely making the minimum payments on your high interest credit card bills, the choice is easy. Taking a payout for your structured settlement annuity benefits is a financial decision that can have positive repercussions for years to come.
What Would You Do With Your Structured Settlement Annuity Benefits?

  • Pay off your current credit card bills. Eliminating monthly credit card bills and the accompanying high interest rates can free up your cash flow.
  • Complete a college degree. Having the money to pay for a college degree can help you get the new job or job promotion that you have always dreamed of.
  • Pay for your child’s college education. Enabling your children to get a college education debt free is likely the greatest gift you can give your son or daughter.
  • Start a new business. If you have always dreamed of starting that new travel business or photography studio, the decision to get settlement money now will allow you to enjoy going to work for yourself everyday.
  • Take the vacation of your dreams. By making the decision to sell your structured settlements you can get the cash you need to take yourself or your family on a once in a lifetime vacation.
  • Buy a second home. Instead of paying expensive hotel bills at your favorite travel destination, why not buy a vacation home so that you can spend more time in the places you love?

With an “immediate” annuity, you can likely start receiving payments in as soon as 30 days. Annuity payments are subject to income taxes. Therefore, withdrawals made before age 59 and a half years old are subject to taxes and a 10% early-withdrawal penalty. However, if this 10% fee is less than your current interest on maxed out credit cards, it makes sense to pay the penalty and get your money so you can pay down your debt. As a general indicator, a structured settlement can save you somewhere between 25% and 35% in state and federal taxes on interest income that would otherwise be subject to tax. The exact amount depends on your tax-bracket, but these benefits too are erased if you maintain high credit card balances with even higher interest rates.

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