Did you know that the typical American household is buried under $16,140 worth of credit card debt in addition to $1,766 in past due medical debt? Furthermore, expensive monthly student loan payments are major contributing factor of financial stress for several Americans. Did you know that the average graduate from the class of 2015 is likely to have a minimum of $35,000 in student loan debt? Because of all these reasons and other financial lemons that life can throw your way, it’s easy to see why making lemonade by finding ways to reduce debt is a key part of establishing and maintaining financial stability.
On top of finding way to reduce and scale back your living expenses, deciding to sell your annuity or structured settlement annuity benefits is great way to come up with extra cash that can then be used as a financial cushion. Everyone can use a little extra cash in their life to manage their expenses, and deciding to sell your annuity is a surefire way to create a healthier and more stable financial future by paying off your debt fast.
Annuities work by making payments on a regular schedule for a certain amount of years or even a lifetime. For may retirees, these structured payments are an important source of income and are heavily relied on. Unfortunately, you’re aren’t able to withdraw your money early without having to pay heavy fines, which is why you might decide to sell your annuity payments instead of withdrawing all the cash at once.
Here are just a few benefits you can expect to experience if you decide to sell your annuity.
You’ll have have cash money to make it rain on your bills
While it’s true that the structured payments of annuity provide a steady source of long term income over a long period of time, bills and other expenses can still quickly pile up and lead to a large accumulation of debt. When you need to cover expenses in the immediate future, structured settlement payments do little to ease the stress that comes with financial insecurity. Deciding to sell your annuity for cash allows you to take control of your finances and use those funds however you need them. It’s a great way to establish an emergency fund or pay off high interest debt.
You can avoid inflation
Because annuities pay out over the long term in small, constant amounts, the value of thee payment will decrease over time due to inflation. Just think of how expensive groceries are today compared to how much they were years ago. For example, you purchase a larger amount of items for $20 10 or 15 years ago than you can today. Selling your annuity for cash allow you to avoid losing the value of your money to the economic changes and inflation that’s bound to happen. You’re literally able to get more bang for your buck!
You don’t have to sell the entire annuity
Did you know that it’s possible to sell a portion of your annuity and keep the rest? It’s a great way to have your financial cake and eat it too. The key is to sell just enough to cover your immediate expenses and keep the remainder in order to have a steady stream of structured payments. This allows you to have the best of both worlds; a lump sum of cash for immediate expenses and structured payments that still provide a steady source of income.
You can avoid hefty early withdrawal fees
If you withdraw from your annuity before the age of 59.5, you’re going to face steep fines and penalties that will put a dent in your lump sum payout amount. Penalties can be as much as 10% in addition to income tax on your investment earnings. That means that a significant amount of your own money will be gone before you even have a chance to hold it in your own hands. The best way to avoid paying these expensive fines and fees for your own money is by selling your annuity for cash.