Structured Settlements / Future Annuity Payments

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csadvisor's picture
Status: Member (Offline)
Joined: Oct 6 2008
Posts: 11
Structured Settlements / Future Annuity Payments


I have a question for anyone who wishes to opine.  I have a client that has a structured settlement that will pay money to them in the future on regular intervals.  Given the current economic quagmire, do you think it would make sense "sell" those payments for the current sum.  Normally I would never advise someone to sell future dollars, but given what I am currently seeing I am not sure that advice any longer applies.  The same would apply to annuities that guarantee a future sum.  Obviously the value of that future sum would be greatly diminished should currency be devalued.  

Septimus's picture
Status: Silver Member (Offline)
Joined: Aug 19 2008
Posts: 200
Re: Structured Settlements / Future Annuity Payments

I have no qualifications to answer, so to speak. Since many of these annuities and structured settlements are funded by insurance companies and insurance companies have invested in a lot of toxic assets they thought were safe, I think your concern is well placed.

I have  a little over 6 years before I can start to draw a small pension at a reduced rate instead of waiting for the "full amount" at age 65. If, by some miracle, that pension is still around I will do so as a bird in the hand is worth two in the bush. Your post also got me to thinking about the possibility of selling that stream of payments to someone else when (and if) I am able to collect.

 Just be careful when selling a stream of future income as I have read that the buyers for these are true scam artists in the worst sense. Make sure the true present value of the money (given a stable economy, ha!) is understood and get as close to that from the buyer as possible.

krogoth's picture
Status: Platinum Member (Offline)
Joined: Aug 18 2008
Posts: 576
3 words, bye bye money

No seriously,

I am not qualified to make this decision as well, because it's a rock and a hard place type deal. You deal now for a lump sum finalization, and the dollar could drop in value. You reinvest after finalization of the sum, and you can lose it all. You leave the money alone, and whoever is handling the structured settlement, 401k, IRA, or investment of any sort can go under. The companies go under and they will be protected for litigation or a class action, and even if ligation happens, it can take multiple years for any kind of settlement and the lawyers will get most of it. Any sort of structured payment or dividend is backed by investment of some sort, and investment of any sort is unstable at best right now.

You may want to consider safer countries with better stability just to shield the money for now and wait it out to a more stable time. Of course you can wait it out and currency may be worthless. You may want to convert it to Gold or Silver.

I have a ton of people I know who's retirements and investments have been whittled 50% or better, and are only getting worse. Some have worked 30+ years and will need to work well into retirement because of this mess. In fact, we are quickly becoming a country where our retirees will need to work until they physically can't anymore, that is if they can find a job.

No easy answers for this subject.



ds's picture
Status: Bronze Member (Offline)
Joined: Oct 13 2008
Posts: 43
Re: Structured Settlements / Future Annuity Payments

If we have a decade of deflation those future payments could be incredibly valuable. There is no guarantee of inflation.

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