So you’ve finally won big and are now facing the decision of what to do with your earnings. You have a choice of getting structured settlements over the course of a few years or you can get one big lump sum payment. It can be a tough decision, especially if you’re hard up for cash or are trying to pay off debt. However, if you need cash fast one potential option is to sell your structured settlements to a third party business who will give you cash up front for the settlement. They usually maintain a relationship with a bank that allows them to get customers cash quickly at the best rates possible. It’s a great option for someone who is looking to make a positive life change quickly.
Well How Does My Annuity Settlement Work?
Each lottery will be a bit different, but the two major ones (Powerball and Mega Millions) have distinct ways in which they pay out the annuity settlement. Mega Millions gives you one immediate payment upon winning and then hands out 29 payments every year, that increase by five percent each year. Powerball is similar — 30 annual payments that also increase each year.
What this means for you, however, is that you are not in direct control of your cash flow. You get a certain amount parceled out to you each year, instead of having it all at your disposal to invest other places or to pay off any debt you may be in currently.
What Could I Do If I Opt for a Lump Sum?
If you sell your structured settlements in favor for a lump sum, the world is your oyster. If you’re not in any debt currently, you could purchase a new car or home that you’ve been wanting or needing. You could travel or donate to charities.
The smart thing to do is always to invest a portion (if not the majority) of your lump sum payment — either in stocks, a retirement plan, or a savings account — where it can grow over time and make you even more money than what you started with.
If you’ve found yourself in debt — either from credit card bills, medical bills, or student loans — another good idea might be to sink a portion of your earnings into paying off that debt right away so you can start with a clean slate. Hopefully, you’ll be able to stay out of debt and keep your finances in order with this leg up!
Are People Happy With Choosing A Lump Sum?
Naturally, results may vary, but a study showed that over 90% of people who chose to sell their structured settlements were pleased with the result. When you sell your structured settlements, you opt for greater personal freedom in what you do with your finances. If you’re worried about spending all that money right away, a lump sum option may not be for you. However, for a significant number of people, a lump sum option provides the financial freedom they’ve been looking for and a chance to enjoy some of the finer things in life.