Imagine something for a moment — you were just awarded a structured settlement for medical damages, or just won the lottery, or are otherwise due some type of annuity. You begin to make plans for your newfound earnings, re-budget your entire life, and eagerly anticipate your payment so you can begin the next chapter of your life.
Things aren’t always so simple however, even for winners. Assuming you are a lottery winner (congratulations!), you should know that the federal government will be taking about 25% of your earnings right off the bat. Depending on where you live, your state takes another 6-9%.
“So what,” you’re thinking, “I’m still about to get a life-changing check in the mail any day!”
Not so fast — believe it or not, lottery winnings like the Mega Millions or Powerball contests, annuities, and structured settlements usually all have one seldom-discussed stipulation attached to them. You won’t be getting all of your money up front. You’ll be receiving it over the course of 30 or more years. Yikes! With those sort of limitations, one could easily see how newfound money can be difficult to budget out. It may take decades before you receive your full payment.
Luckily, there are options. There are tons of companies in the marketplace today that specialize in purchasing structured settlements from individuals and allowing them to have access to most of their winnings up-front. In an example, let’s say you win a million dollars. Again, congratulations! If you accept the terms of your settlement as-is, you may only be receiving about $30,000 a year. That’s a very nice addition to anyone’s income, but it’s not quite as nice as a lump sum payment. If you were to approach a company that purchases settlements with the intent of selling your annuity or selling lottery payments, you may find them willing to give you something very close to a million dollars up front. In return that company will keep a small slice of your earnings, but you won’t be the one waiting 30 years for annuity settlement payments anymore.
Annuity settlement is growing more and more popular in modern times. It doesn’t take a rocket scientist to see that if you’re trying to pay off debt, purchase a vehicle, go to school, or treat yourself — thirty years’ wait might just not cut it for you.