How To Spend A Lump Sum From Your Retirement Plan

As we approach the twilight years of our lives, millions of Americans will be given the opportunity to take a lump sum from their retirement plans, especially those who don’t have a significant amount of capital tied up in the schemes. This is because providers stand to make less profit from you compared to people with a significant investment in their plan, and so it’s much easier for the firms involved to get you off their books as quickly as possible. Although this might sound like a bad thing (and in some cases it certainly is), those who understand how to use this cash advance wisely could benefit tremendously in the long term. 

The average amount accepted as a lump sum by American citizens is around $15,000 and is usually obtained at the age of 55, although admittedly some people do wait until their working lives are over. Still, at 55 you’ve still got ten years or more to work out what you want to do with this money, and could well increase it tenfold if you obtain the right advice and the most up-to-date information, which is why I’m taking the time to write this short post today. 

Taking A Long Holiday

Though this isn’t going to provide you with any extra funds, taking a long holiday (perhaps a round the world cruise) can be a fantastic way of enjoying the fruits of your labor and investing in yourself for a change. After 40 years of hard work and with 10 more still to go you deserve a treat, and what better way is there of accomplishing this than taking a nice relaxing break where you can check out some of the most beautiful sights on earth?

Providing For Your Family

By this time you should be reasonably comfortable in your life, but some younger members of your family group may not be so lucky, which is why you might consider helping them out with your cash lump sum. Getting a deposit for a mortgage has become increasingly difficult, so perhaps you could help out others around you who are struggling. 

Investing In Gold

Presuming you’re pretty content with the quality of life you’ve obtained and your family members are well looked after, I’d advise that you to look into different investment opportunities and attempt to increase your funds before retirement age. There are some fantastic firms out there who deal specifically with helping people to purchase gold and other precious metals, and as these items tend to increase in value steadily, perhaps you should give them a shot. I recently read a real review of regal assets and discovered they’re the industry leaders, so try them out. 

Purchasing Land

Regardless of the amount you have to spend, land in the US is always going to increase in value. So, whether you can afford to buy 10 acres or even just a single plot, using your cash in this way is guaranteed to keep it safe until you know what you want to do with it long term.

Anyway, it’s time for me to go now. I’ve got to do some serious research into the gold market as I’m actually considering making a small investment myself. I’ll let you know how I get on.

Until next time my friends…

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Different Ways to Sell My Structured Settlement for Cash

Selling your structured settlement isn’t exactly brain surgery. Many people believe there is an exact science to it, that there is a formula that you have to follow in order for your sale to be successful. That is not true. Selling structured settlements is not a complex process nor is it something that makes you want to pull your hair out before it is even over. It is actually quite simple. It simply comes down to two things: how much do you want to sell for and how much you want left over in your savings. That is it. However, there are different ways that you can sell your structured settlement for especially for cash and in this article I will explain all the different ways you can do this in detail. 

Before you sit there and ask yourself, “How can I sell my structured settlement?” there are a couple of things that you need to do first. The very first thing you need to do is figure out exactly how much cash you need. I know that this may seem obvious, but it is nonetheless important for you to do. Sit down and ask yourself, “What do I need the money for?” Do you need money to pay off some medical bills that you recently received? Do you have some debt that you need to get rid of? If so, how much do you need? Do you feel like you want to go on a vacation? If so, figure out how much you will need in order to pay for it. This step is all about budgeting. Never take more than you actually need.

The next thing you need to do is figure out every little detail of your structured settlement. From which insurance company did you purchase your annuity from? When did you win your lawsuit? When does your first payment begin? How much is it? How much is your total settlement? Finding out these details is crucial because whether you use a private investor or company to sell your annuity, they will need to know these details before they can even start the selling process.

The last thing for you to do is to figure out your payment options. The private investor or company that you hire to help you sell your annuity will tell you what options you have available. You are usually left with only two options: cashing your annuity for one large lump sum or receiving a little bit at a time in the form of monthly payments. With whatever option you choose always choose the one you are most comfortable with and whichever one will make you happy.

The whole process of selling your structured settlements may seem like a daunting prospect. Do not let your fear control you. It is a rather simple process and usually only takes little more than a week to complete. If you follow the steps I have outlined in this article you should be able to sell your structured settlement for cash in no time at all.

Author Bio:
Mark Long has very much experience and is a leading expert in selling structured settlements payments. If you ever find yourself asking, “how long does it take to sell a structured settlement?” you can always ask Mark for some guidance which he is more than happy and willing to give.

Finding Funds: All About Structured Settlements

Structured settlements are one way that courts and insurance companies make sure that not only is justice done, but that payments go toward their intended purpose. When you're involved in an accident, medical malpractice suit, or you're just retiring from work, a structured settlement provides for periodic, guaranteed, monthly or quarterly payments. But, sometimes, it's better to just take the cash. How do you choose the right payment option?

Understand What A Structured Settlement Really Is

A structured settlement is nothing more than an insurance annuity. An annuity is a contract that requires an insurance company to guarantee monthly, quarterly, or annual payments to an annuitant (the policyholder) for a set period of time.

Sometimes, the annuity specifies payments for a set number of years (i.e. 10 years). These types of annuities are called "period certain annuities." The other type of settlement option available is a life payment annuity. These annuities make payments for the life of the policyholder.

For example, let's say that you win a lawsuit. The defendant must pay you $1 million. A period certain annuity settlement option would require an insurance company to pay the $1 million out to you over a period of 10 years, with interest. The life payment option would require the insurer to pay that same $1 million out to you over your entire life.

Why choose the life option? Because payments continue regardless of how long you live - even if you would have otherwise spent all of the million dollars. So, it's possible that you could end up getting more than what you would receive under the 10 year payment option, if you live longer than you life expectancy calculated by the insurance company.

Why They Are Beneficial For You

Structured settlements have a huge benefit over lump sum payments: certainty. With a lump sum payment from a retirement plan, personal injury claim, or medical malpractice suit, you are on your own to manage the funds.

If you run out of money before all of your medical expenses are paid, or before you die, you're out of luck. With a settlement option that's structured, you will never run out of money before the contract expires. For lifetime payments, it's impossible to run out of money before you die.

Why You Might Want To Sell One

With structured settlements having a seemingly unbeatable advantage, why would you ever choose a lump sum payment? One reason: you have immediate expenses that require cash right now. But before you sell your structured settlement payment, keep in mind that any company willing to buy your payments won't give you the full value of your structured settlement.

Companies, called factoring companies, buy structured settlements for a discount. A discount factor of 8 to 14 percent is common. On the high end, at 14 percent, you will receive only a small portion of your total structured settlement option. For example, a $1 million settlement option can quickly turn into a lump sum of just $250,000 or less.

Why so little? Because of the time value of money - a $1 today is worth a lot more than $1 20 years from now. Even though it seems like a small amount of money to accept in lieu of the full settlement payment, it's not always a bad deal. As always, consult with an attorney or financial planner before you sign anything.

Melissa Rudd is a financial consultant with several years experience. When she's not in the office, she enjoys sharing her insights by blogging online.

Evaluating Structured Settlement Offers

Structured settlements are a monthly or weekly payment that is given to those after a settlement by an insurance company. These payments guarantee an income over the life of the contract. However, this type of settlement does not work for everyone and many decide to sell their settlements in return for a lump sum. Shopping around for the best deal is always advised, but how do you choose the best buyout offer?

Will the buyout alleviate your financial problem?

The reason behind many selling structured settlements is due to financial necessity such as; paying off credit cards, debt, college fees or a mortgage. It is important to remember however that you will always make a loss on the amount received, as the lump sum will be lower than the overall amount due and is subject to federal and state tax. So it is worth considering how much money you need? Will the money received cover and address these needs? If unsure, consult a structured settlement payment calculator which will help you decide if it is worth selling your settlement or looking for another option.

Furthermore, can you navigate your financial future without the payments from your structured settlement? If you depend on your monthly income to maintain financial security, it may be too valuable to sacrifice as cash. Look at your current expenses to determine your reliability on the current regular payments before agreeing to a payout. Your financial future is important and should be carefully guarded!

Do you understand the buyout agreement?

Selling your structured settlements is not a complicated process, however, there is certain terminology which is used that you should familiarize yourself with and make sure that you understand. Reviewing the details of your agreement with the financial buyers is advised and if you are unsure, do not hesitate to ask questions or consult an attorney for clarification. After all, it is your money and you should feel totally comfortable with the process before signing the dotted line. 

Do you feel bullied?

This touches on the last point, but taking your time really is key when evaluating buyout offers. If the company you contact tries to rush you in to a decision or you feel pressured in to accepting the cash for structured settlements, say no. Such tactics are known as a ‘hard sell’ and are common among the more unscrupulous structured settlement payment buyers. Do not let yourself get pressured or bullied in to making a hasty decision. Take your time to carefully consider all your options.

Are you dealing with a trustworthy company?

Take the time to do your homework and thoroughly research the company that makes you an offer. The first place to always check is the Better Business Bureau which has a directory of all the registered companies. Do not just check they are registered; look at their reviews and ratings too. Do they have any complaints? Are they reputable? Many companies have been known to offer higher-than-expected amount of money to customers and have later failed to honor their agreement. It is worth checking for these problems before moving forward and signing the agreement. You wouldn’t hand a total stranger your wallet, so why would you hand over your money to a company you know nothing about?

Author BiographyMark Long is a reputable and well-respected financial advisor who specialises in selling structured settlements and annuity. He has recently partnered with an online finance website to provide advice for those looking to receive cash for structured settlements.

Pension Liberators Prey on UK People Feeling the Pinch

The UK financial crisis rumbles on. After the 'great recession' of 2008-2009 it was speculated that the financial stability of the UK would recover and technically the country would be out of the recession by the first quarter of 2012. 

But the economic recovery has failed to gain traction and the UK now finds itself in the longest financial downturn slump in more than a century.

The UK government has commenced savage cuts in public spending and average UK household debt is one of the worst and spiralling. In fact, nearly one in five people in the UK who plan to retire in 2013 have unpaid credit cards and mortgage debts. This equals an alarming number of middle-aged people within the UK population who are finding themselves desperately trying to keep the wolves from the door with limited financial weapons to choose from. But, there is one metaphorical pot of gold that many are turning to.

For those that have saved for their retirement into a personal or company pension, tapping into that pension pot can seem like an easy way out to clear that financial burden. But in reality, invading those pension savings before the age of 55 in the UK can have severe consequences in terms of financial comfort during retirement and can also land people in hot water with Her Majesty's Revenue and Customs (HMRC) - the UK taxman.

Unscrupulous, unregulated individuals and marketing companies have been conning hard-up pension savers with "Pension Liberation Schemes". These schemes are unauthorised by the Financial Services Authority (the regulatory body in the UK for all Financial Advisors and Services). These schemes let pension savers "borrow" from their pension, before the age of 55 - which is the age that retirees can draw their pension.

These advisors and companies contact their victims usually via text message, emails or cold calling. They offer a "too good to be true" offer. They fail to explain the consequences of their scheme, which can leave people in financial ruin when they actually reach retirement. They take control of your pension fund, put it into a corporate bond and lend half of its value back to the victim...which must be repaid along with interest before retirement. They also charge hefty fees of between 10 to 50 percent of the fund value. HMRC will also require the victim to pay tax...but rarely do these scam advisors tell the individual this. This leaves the victim with a significant tax bill as well as penalty charges if they fail to disclose it to HMRC from the outset.

UK authorities are desperately trying to tackle pension liberation fraud, as are many pension providers - in the form of suspending transfers into schemes of which they are suspicious. However there are many people still being caught out.

Pension unlocking however is a perfectly acceptable way to utilise cash in a pension. From the age of 55, UK pension savers can take a tax-free cash lump sum from their pension of up to 25 percent of the total fund value which can be used to clear expensive debts. The remaining pension can then be either used to purchase an annuity, or one of a handful of other options designed to provide an income in retirement such as an income drawdown pension.

Above all it is important that people seek professional advice from regulated experts that specialise in post-retirement income. Annuity-Quotes.co.uk have a wealth of experience in UK annuities and pension transfers. Their website offers a wealth of information including the different options available and an annuity rates calculator. A UK regulated company will be able to provide their FSA number which can be verified.

Regardless of the options, a decision to raid pension savings should never be taken lightly and in reality should really be used as a last resort where debts are crippling and the economic benefit of paying them off with a tax free cash lump sum far outweighs the benefits of leaving the pension pot to grow until the saver stops working. In the UK, the state pension age is between 61 and 68, however individuals can continue working past UK state pension age if they wish. Even the perfectly legal practice of pension unlocking in the UK, will inevitably leave the individual with significantly less income in retirement than if the pension fund remained untouched.

Some questions that should start alarm bells ringing with any individual who has been approached by one of these pension liberation schemes, are as follows:

• Are you a UK citizen aged under 55? 
• Were you contacted by an unsolicited, email, text or cold call? 
• Is the advisor or company regulated in the UK by the FSA and can you verify this? 
• Have you recently left the UK Armed Forces, work in the UK Public Sector or have you recently been declared bankrupt? 
• Is this scheme registered or newly registered with HM Revenue and Customs? 
• Has the advisor or company mentioned "legal loophole"? 
• Are you being pressured into transferring your pension quickly? 

In December 2011, the UK High Court ruled that schemes allowing savers to access their saved pension funds before the age of 55 are illegal. There are extenuating circumstances where individuals may be allowed to access before the 55 year old threshold and this is usually in the case of a diagnosed terminal illness.

Author Bio

Lee Rawding is an Independent Financial Advisor in the UK who specialises in post-retirement income options and pension annuities.

Selling Your Structured Settlement for Maximum Cash - An Illusion or Reality

What a Structured Settlement Is and Why Some Plaintiffs Opt to Sell Their Future Payments?

Senior couple signing financial contract (Photo credit: SalFalko)

As you probably know, people who get injured in various accidents usually receive a structured settlement. This is actually a monetary compensation paid by the insurance company in a stream of fixed installments over time. Such financial agreements typically arise as the result of a lawsuit from various personal injury cases, like traffic accidents, medical malpractice, work related injuries, wrongful death and some others. There may be also cases with no relation to personal injuries, like legal malpractice, worker's compensation, commercial cases, etc. However, in any of these circumstances the entire amount of monetary award assigned to a plaintiff is spread out over some time period and distributed in the form of monthly, quarterly or annual payments, rather than in a single lump sum.

Of course, any structured settlement owned may become an excellent source of substantial additional income. Though many structured settlement holders who face sudden life circumstances change and unforeseen financial burdens, find that they need pretty much more cash than their periodic payments provide. There is also a group of plaintiffs who consider it rather stressful and inconvenient to be tied up to the inflexible schedule of small periodic payments and, therefore, wish to unlock their future payments and get access to their legal money in full now to use it however they need: either to eliminate current financial obligations or meet some short-term or long-term goals.

For both groups of structured settlement recipients turning their future payments into a lump sum of cash is definitely the most deliberate choice. Since 1988, it has become legal to sell structured settlements, annuities, insurance policies and some other related financial agreements in US in return for a lump sum of cash. In such a way, funding companies, also known as settlement funders, have quickly emerged on the asset-backed market. They are dedicated to accomplish such transactions allowing payment recipients to gain absolute control over their finances.

The truth is that many plaintiffs hesitate to sell their structured settlements, even when facing the dire need in cash, mainly influenced by a rather widespread opinion that a settlement sale transaction may dramatically reduce their monetary reward. But what actually happens with your money when you sell your future payments to a funding company? How much is your structured settlement worth in fact? What should you do in order to get most cash for your settlement or is it still wiser to keep to the initial payment schedule with small periodic installments coming over time? Let's clean the air on these rather crucial questions for each and every plaintiff.

Roots of the Misconception

Indeed, there is a strong belief that getting maximum cash after selling a structured settlement is no more than a myth and a plaintiff would get a dramatically reduced amount of his/her money. In fact, settlement sale transactions owe their bad reputation to non-direct funders. Unfortunately, there are some funding companies on the asset-backed market that partner with intermediate brokers and use some third-party assistance.

They typically require certain fees for their services, and it is rather obvious, that every broker in this chain will cut off a piece of your monetary award. As longer this chain is, as less money you may expect to get. And like many other promises and guarantees connected with third-party companies, adequate settlement cash payouts may also turn to be just an illusion.

When Getting Maximum Cash is Real

But the situation may go the whole different way, if you are dealing with a direct funder. Established and reputable funding companies operate typically as direct funders avoiding any intermediate brokers during the whole transaction process. While applying various solid financial and legal instruments, they are able to provide plaintiffs with maximum cash advances for their structured or annuity settlements. When you hand in all related papers, their financial consultants will determine the value of your settlement and tailor a package meeting all your specific needs and goals.

It's also worth to point out that an established settlement funding company imperatively submits every single transfer agreement directly to the local court for review to ensure that the proposed cash payout option is in the best possible interest of a plaintiff and a purchasing company works in the fullest compliance with both state and federal laws.

In such a way, whether getting maximum cash for your structured settlement is an illusion or reality is the matter of your deliberate choice only. If you would like to share your personal experience of cashing out future settlement payouts, feel free to do that in the comments below.

Author's Bio

Derek Wrend is a PR manager at OzarkFunding - a settlement funding company offering the maximum lumpsum of cash for structured settlements.

More Structured Settlement Questions

Have you been awarded a large amount of money from a lawsuit? If so, you might be curious about structured settlements. The court will offer you a choice of how and when you want to receive your cash reward. You may choose to receive it all at once, or you can set up a long term payment plan. This long term payment plan is what is known as a structured settlement. Before you make any decisions regarding your reward money it is a good idea to learn as much as you can about how structured settlements work. Here are some more answers to your structured settlement questions.

Why Would I Want to Create a Structured Settlement?

There are many advantages to receiving your reward money in the form of a structured settlement. It will save you in interest taxes on any investments you make. It will also allow you to set up a steady stream of income so that you can properly plan for your future. Structured payments help ensure that you don’t accidentally spend all of your compensation at one time. Studies clearly show that compensation recipients tend to spend less of their reward if it is provided for them through several payments over a long period of time.

Will My Reward Be Any Less if I Choose a Structured Payout?

No. The amount that the court has awarded you will not change. You will receive the same amount whether you choose a structured payout plan or if you choose to get all of the money at once. However, structured settlement payments can help save you money in the form of taxes.

How Much Will a Structured Settlement Save Me in Taxes?

The amount that a structured settlement could save you in taxes could be substantial. You can expect to save approximately 25% to 35% of your total reward in state and federal taxes on any income your reward will generate. All settlement funds are tax free, but you will be taxed on any interest you accrue if you invest any of your reward. If you invest the single large lump sum you will end up paying more in taxes than if you invest using a structured payment plan.

How Much Flexibility Will I Have to Set Up This Form of Payment?

Structured settlements offer a tremendous amount of flexibility in determining how and when the payments will be made. You can set up equal payments over a set number of years. An example of this would be to receive $1000 a month for 20 years. You can set up payments on a per week basis, or you can set up monthly or bi-monthly payments. The payments do not have to be equal either. You could set up specific periods of time that pay out more than others. For example, if you were injured in an accident and require a new motorized wheelchair every 5 years, you could set up a payment plan that pays out more money every 5 years in addition to the regular monthly payments. This would allow you to pay for what you need when you need it.

What If I Change My Mind?

Once a structured settlement has been created it cannot be changed or altered. So if you currently receive $500 a month from a structured settlement and you need $1000 the next month, you cannot change your agreement. You can sell part of your total monetary reward to a company in exchange for receiving a lump sum of money now, when you need it.  The result of this form of transaction will be that you get all of your money upfront, but you will lose a percentage of it to the company.

Overall, structured settlements are very helpful to plaintiffs, but it is not recommended that you pursue this form of payment until you speak with a lawyer or tax professional.