If you’re receiving annuity payments as the result of a structured settlement or some other legal arrangement, you can count on that money always being there for you. While it’s great to have that kind of assurance of financial stability, it can be to your disadvantage if you need money up front instead. Here are a few instances where you might want to consider selling your annuity payments.
1. Buying a House
Buying your first home isn’t just important so that you have a place to live, it’s one of the most crucial things you can do to ensure financial security. Building up equity in a home is so important, that it’s usually worth it — from an economic point of view — to sell your annuity payments to make it happen.
2. Starting a Business
If you have the opportunity to make a change that can dramatically improve your quality of life, then you’ll want to get started right away. If you have money coming in on a regular basis through annuities, that’s not going to provide you with enough money up front to start a new business, or make necessary investments in an old one.
3. Paying off Debt
If you’re carrying a lot of debt (especially if it’s debt with a high interest rate) then it makes no sense to collect money gradually via annuities when you could have that money up front instead. When you factor in the interest you’re paying on that debt, you can save a lot of money in the long run by selling your annuity payments, even though the lump sum you’ll be getting will be less than the total settlement.
4. Pay off Medical Bills
You can’t always anticipate the twists and turns that come with living. You might have every intention of leaving your annuity payments untouched, but that calculation can change in an instant if you have emergency medical bills. Fortunately, selling those annuities is always an option.
Some expenses need to be paid right away and can’t afford to wait. If you’re planning on going to college — or you have a son or daughter about to go away to school — you need that money now, not spread out over several years.
There are benefits to being able to rely on consistently receiving annuity payments. It’s good to know, however, that if the time arises where you need your settlement money sooner rather than later, you can count on being able to sell your annuity payments for money up front.