From putting your child through college to building a dream home, it’s easy to think big with the right amount of cash lying around. Yet many Americans are cash-poor, living pay cheque to pay cheque, without any real savings; in fact, less than 30% of Americans save at all. Given that the average yearly cost for tuition, room and board at a four-year college is currently just over $18,000, according to TopUniversities.com. Costs are increasing at roughly three to four percent per year, a study on trend in higher education found. A cash lump sum could certainly help in that department.
If you have an annuity or structured settlement package. you could access such cash fast by selling your annuity. An annuity or structured settlement is a cash amount paid out over a period of time. These are usually awarded to lottery winners — Mega Millions lottery payments, for example, take the form of an initial lump sum followed by 29 smaller ones each of which increase by five percent — life insurance payments, which can pay out over a specific timeframe such as 20 years or a spouse’s lifetime, and legal settlement recipients. Law suit settlements that may result in a structured settlement vary from medical malpractice suits to employee suits.
By selling an annuity settlement you have access to a lump sum and avoid the seven to 15% surrender fees that you would accrue if you were to surrender it. Annuity payments are taxable and if you withdraw from your annuity before the age of 59 and a half, you will be subject to taxes and a 10% early-withdrawal penalty. You will also pay as much as three percent per annum in annuity fees. A lump sum accessed by selling your annuity can offer much better value and allow you to eliminate all your debts or pay for college in its entirety.
