All you need to know about selling annuity payments

What is annuity?

The term annuity refers to a powerful planning tool which is used for both the right situation and the right purpose. In fact, it provides a value which is tremendous for every buyer. If annuity payments are used in the right manner, it will provide a tremendous value to every individual who buys them. However, most of buyers miscalculate their own resources when they purchase the annuities. As a result, they will end up underperforming the annuities.

There are two major categories of annuity payments: variable and fixed:

  • The fixed annuities : This is one of the types of annuities whereby it has a fixed principal which is guaranteed by an insurance firm. Every year, the gains are usually locked. Therefore, you can match and mix different types of annuities so as to create an income which is guaranteed in the retirement which is not influenced by the market fluctuations and interest rates.
  • The variable annuities : Another type of annuities is the variable option. The principal value is varied basing on the sub- account value in which your money is allocated. The investments are good for individuals who wants to tolerate risk and upside the appreciation in their portfolio. The type of investment typically has higher expenses and fees as it has an additional insurance cost which is prevalent on the insurance component.

Annuity Selling Options

The Selling Annuity Payments options include: partial, entirety and lump sump.

  1. The partial: If you want to sell your payment option, you will go on receiving the periodic income without the tax benefit loss. Apart from that, the structured payment will also carry on the tax benefit and even extend to their heirs incase the beneficiary dies before collecting their payments.
  2. The entirety: This involves emptying all the investments once. Thus, it ends up the chances of any periodic income payments in future. On the contrary, you will be having a lump sum payment in your hands while investing.
  3. The lump sum: When you sell your lump sumps with time, it will give you huge increments. But, you are guaranteed a steady flow of income from the structured settlements in terms of the contract as you carry out similar tax benefits.

How to sell annuity payments

The procedure of selling your annuity payments is straightforward. It normally begins with making a decision to sell and ends with having the cash in your hands. The different structured firms will be able to complete more than one thousand transactions in one month. It is important to choose a reputable firm since it will offer a speedy, dedicated and a fast customer service. You will also get free quotes and cash advances in minutes as soon as it is approved. The following is a step by step procedure of selling annuity payments:

  1. Making of a decision to sell: For whatever reason, you might want to sell your annuities. If you have a genuine motive, selling your payments will not hurt the financial future. Thus, you should go a head and begin the process.
  2. Contacting the Annuity payment firms: The next step is to get on touch with one of the representatives who will be able to guide you with all the step of selling the annuity payments.
  3. Getting a free quote from the company: Most of the recognized companies offer a very competitive pricing. Within minutes, you will be guaranteed a free quote.
  4. Get a cash advance: After signing up, you will then receive a cash advance. Therefore, you will start using the amount for whatever reasons.
  5. Set a court date: After submission of all the paper work, you will then present the main reasons for Selling Annuity Payment before a judge prior to receiving the payments.
  6. Cash in the hand: When the court has accepted the transfer, you will be able to access the money.

Reasons for Selling Annuity Payments

Cash Your Annuity

One of the main reasons why one requires selling of the annuity payments is the case of accidents. Even tough there is an insurance companies; it only covers a fraction of all the payments needed. Thus, you will need to Sell Annuity Payments to cover for all the medical bills as well as the physical therapy. You can also sell annuity payments if you want to win a court case entitled for a long period of time. The annuity payments will provide you with full funding. Moreover, the annuity payments will assist you to clear your debt.…

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What you need to Know before Selling your Structured settlement

Many civil cases particularly personal injury lawsuit never go to trial since parties involved often reach a settlement agreement during the litigation process. The defendant may agree to provide compensation to the person bringing the lawsuit (plaintiff), which can be paid as a lump sum or can be paid over a predetermined period. When all or part of the damage is paid in regular payment, we call that kind of arrangement as a structured settlement.

More often, the structured settlement is created through purchasing annuities, which guarantees a stream of income to the plaintiff. The structured settlement can be provided in any predetermined schedule are per the plaintiff choosing, for instance, the money can be paid in annual installment or over a number of years or for the rest of the plaintiff life. Some of these payments options have their disadvantage among them tax expenses; therefore, any time a plaintiff decided to choose structured settlement, they should hire a tax attorney, a personal injury lawyer, or a financial advisor to explore the consequences of each option.

How To Get Cash For Your Structured Settlement

A typical structured settlement involves a defendant or his/her insurance company signing an obligation to pay you, as the claimant through a third party. The third party will purchase an annuity that fulfills the required payment done to you The annuity is commutable; it’s non-assignable and not transferable; therefore no one will be able to stop it under any circumstance. As the claimant, you are the only person who is legally allowed to sell the structured payment and receive the lump sum amount.

People sell their settlement for different purposes, and if you are considering doing the same, you should not take the selling decision lightly. Do not sell your settlement because you want to. Here are some common reasons you may need to consider selling your settlement.

  • Paying existing debts, especially those that has high rates attached to them.
  • Making a down payment for a new home
  • Paying off unexpected medical bill,
  • Pursuing a lifelong dream of starting a lucrative business
  • Paying off college fees for a better career

Simply put, getting cash for structured settlements can be advantageous as long as you are able to invest the lump sum amount you receive and earn higher returns in the long run. If you are looking for way to sell your settlement, you should be aware of different ways to do that. In essence, you can either sell a part of your settlement, or you sell full settlement payment and receive a lump sum. The best way to avoid making any costly mistakes it is to hire the right settlement broker.

How to choose the right structured settlement company

Best Structured settlement companiesIn any industry, there are only buyers looking out for the best interest of their customers, but there are unscrupulous buyers out there without your best interest in mind. Below are three things you must look for when looking for the right settlement company. Sometimes the judge may deny even the best buyout, and at times there are good reasons for that, but sometimes the court may give an invalid reason. In that case, you might need to use another company with a better rate. To make sure you do not land in a “landmine,” we have included out top recommended company you might want to consider.

  • Must show genuine interest in helping you: Make sure that the settlement companies you choose demonstrates a high level of service to their customers. Remember they are your representative, therefore should address any concern you might have, and most importantly, they should be able to support you throughout the process.
  • Reputability: You want to choose a company with good track of record for success. You might find a company with long history of active transaction preferable.
  • The purchasing price of your settlement: When you receive quotes from different companies, you might realize that there are a huge different with the lump sum you will get with different settlement companies. The huge different comes from the duration of the agreement, the sooner you receive your payment, the more lump sum amount you are bound to receive.

Top companies you might want to consider

  1. JG Wentworth: JG Wentworth is an industry leader when it comes to purchasing structured settlement. With over 25 years of experience, they have been able to purchase over $ 3 billion of future payment.
  2. Olive Branch Funding: Olive Branch has for the best part of their existence proven to among the best structured settlement company. Unlike many companies, Olive Branch funding focus on three areas, buying annuities, and lottery winning, therefore you expect that they will show genuine interest in you.
  3. SenecaOne: SenecaOne does more than buying settlement annuity: they will come up with opportunities they believe will be most suitable for you. Most of the opportunities they present are designed to help you realize your long- term financial goal. Since they opened their door in 2002, they have helped thousands of people get a better part of the bargain while easing the complicated transfer process for a structured annuity.
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Lowering Your Expenses

Being more frugal does not necessarily mean cutting back or denying yourself certain luxuries.  Most of the time it simply involves the act of tightening up your finances and working down your expenses.

For example:

  • Could you have your house paid off before you decide to retire?  If you’ve got a $1,000 mortgage payment every month, eliminating it would slash $12,000 from your annual needs.  That’s $300,000 less to save up in your nest egg!
  • Could you drive your car for an extra year or longer?  Or buy a used car with cash?  If you can afford to avoid a $500 car payment, that will save you an extra $6,000 per year.  Again, that’s another $150,000 less you need to save!
  • Can you cut down on your household energy costs?
  • Get a cheaper cell phone plan?
  • Get a better price for your insurance coverage?
  • Find a cheaper health care provider?
  • Eat for less?
  • Drive for less?
  • Buy fewer clothes?
  • Hold out a little longer to get the latest gadget?
  • Scale back your discretionary purchases?
  • Negotiate lower rates for you bills?

And many others!  Finding creative ways to save money is something that I feel so strongly about, I used it as the central theme for one of my ebooks “Save MORE, Earn MORE”.

What You Should Do

Go back to the retirement plan that we wrote out earlier in Chapter 2 and think about how you could have some more fun for less.

  • What would be some of the activities that you get involved in?
  • What sorts of things would you find value and enjoy learning?
  • What could you be doing to improve your health and psyche?
  • How can you give back to yourself, your family, and your community?

Think also about some of the ways that you could strategically cut back on your regular, everyday expenses to try to squeeze more out of your bills.

Put this all together and come up with a new retirement income goal.

Is this a number that you could truly live with?

Finally, talk openly about your plan and everything it entails with your spouse.  In order for it to work, the two of you both need to be on board and work together as a team.  Be honest with each other and discuss what each person’s vision of the future may look like.

Remember: Similar to Chapter 2, the goal is not to slash your needs and drive this number down as low as it can possibly go.  It’s simply to consider if there is any opportunity for optimization that you may not have previously considered.…

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How Early Retirement Bloggers Live On Less

Many of the top early retirement bloggers were successful not because they acquired millions of dollars in some extraordinary or unique way.  They were able to do it because they simply found a way to not “need” as much money as the typical person.

One very extreme example of this is Jacob Lund Fisker from the website and best-selling book Early Retirement Extreme.  Jacob was able to retire before the age of 30 after only 5 years of working by getting his annual spending down to below $10,000 per year.  Knowing what we know about the 4 percent rule, a retirement income like this would only require a mere nest egg savings of $250,000!  Though his approach is certainly not for everyone, it illustrates the extent to which a lower income need can affect your overall plan.

Another good example is the blogger Mr. Money Mustache (real name Peter Adeney).  MMM (as he’s called) is another popular retired-by-age 30 character that publicly boasts about enjoying an annual budget of just $24,000.  His retirement only required a savings of $600,000 to pull off.

Along the same lines are Jeremy and Winnie from the website with the unusual name Go Curry Cracker.  They too utilized the 4 percent rule to retire in their 30’s with $40,000 per year in anticipated expenses.  However, they make their dollars stretch farther by living for extended periods of time in places with lower cost of living than the U.S.

One of my favorite examples of a successful early retirement is that of Robert and Robin Charlton from the book “How to Retire Early”.  They were able to save almost $1,000,000 from scratch in just 15 years and retire before age 45 with a projected retirement income of $40,000.

There are many, many other examples of other bloggers who have used similar strategies.  The forum Early also has thousands of stories from people who have either achieved financial freedom or are on their way there.

Redefining the Word “Fun”

A lot can be done with less than you think.  This is especially true when you read through many of the articles from the early retirement blogging community.

As you really analyze their stories and listen to their philosophies, you come to understand that part of what helps make each of their plans a success is all in how you define the word “fun”.

Often you’ll hear them redefine fun as:

  • Traveling to exotic, lower cost of living locations
  • Spending time with family or friends
  • Taking their time to accomplish projects around the house
  • Being active outdoors
  • Volunteering
  • Playing a sport they like
  • Learning a new hobby
  • Tons more!

If your definition of fun is spending is buying the latest gadget, dining out to an expensive meal every night, and traveling to exotic resorts, then that’s fine.  Again, your retirement should be designed for you and no one else.

But understand as a result you’ll be faced with a much steeper challenge.  The math simply doesn’t change.  If we generalize that you think you’ll need a generous $200,000 of retirement income per year, then the 4 percent rule quickly shows us that you’ll need a whooping $5 million for your nest egg.  Are you prepared to make that happen?

Spending Changes As You Age

Even though we’ve been using a “fixed” figure for our retirement income in nearly every example, it may be useful to know that this may not be the case.  According to David Blanchett from Morningstar, inflation-adjusted spending in retirement gradually decreases over time (unless health-care costs cause it to rise again in life’s final years).

He quantifies this as follows:

Households spending $50,000 at age 65 decrease their real spending by about 15% by age 80; the drop hits 20% by age 85.  For those spending $100,000, it’s 20% by 80 and nearly 30% by 85.…

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Optimizing Your Retirement Income Needs

When it comes to your retirement income needs, coming up with the  “number” of what you need for retirement is paramount.   This figure was meant to be some guess at how much you’d need each year to cover your expenses.

We’re going to revisit that topic.  And as you can probably guess, there’s a good reason to do so.  After an exhausting discussion of safe withdrawal rates, one thing should be clear to you:

No matter which one you choose for your plan, every dollar you think you will need for retirement will be an amplification of what you will need to plan to save in your nest egg.

Think back to our simple retirement equation.  The math is easy to see!  Take the 4 percent rule for example:

Every $10,000 extra of retirement income that you think you will need will cost you the time and energy to save up an extra $10,000 / 0.04 = $250,000 in your nest egg.

So why not be strategic?  Let’s turn this concept around and use it our advantage!

For every $10,000 of retirement income that you can afford to do without, that’s $250,000 less that you need to save in your nest egg.

It’s true!  We’ve been generically using $50,000 in every example so far as our target retirement income.  But could you be just as happy with $45,000 or $40,000?  What about even less?

Crunch the numbers.  A retirement income target of $40,000 using the 4 percent rule drops our nest egg savings target down from $1,250,000 to $1,000,000.  Considering how many years of saving that could knock off of your plan, I’d say it’s worth looking into.

Addressing a crucial decision that lies before you: How much money do you think you will need for retirement?

Though initially, you might have your doubts about being able to live on less, it might be beneficial to know that this concept of reducing your expenses is the cornerstone of many successful early retirement strategies.  Have a look for yourself…

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