Whether you are just starting out in life after school or you're a professional who is thinking about retirement, you might have questions regarding how to manage your finances to maximize your retirement. If you are the owner of an annuity, you will have special considerations you will need to make.
There Are Many Reasons Why You Might Own an Annuity
An annuity is basically a contact between you and an insurance company. You pay out some money now to get payments in the future. Annuities can be financial investments. They can be won in a settlement where you opt for structured settlement payments instead of a lump sum. You may be forced to take structured settlement payments if you are really young or the settlement award is more than $200,000.
You may also be offered an annuity for lottery or casino winnings, depending on the size of the winnings and type of game you played. Annuities make a lot of sense for a number of different scenarios. They provide financial stability later in life. If you are worried about future income, annuities can ensure you have a steady income stream. They offer tax benefits, and they can often be negotiated to meet your exact requirements.
However, annuities are always the best idea if you are in need of cash now. The lump sum vs. annuity debate may favor lump sum in some scenarios For example, you may have a child who is in high school and ready to go to college. You may need to sell all or some of your annuity payments to pay for your child's education. Medical bills, a down payment on a house, debt consolidation, and investing in a new opportunity are other scenarios where you might want to sell your annuity.
We will talk about selling your annuity in future posts and what to look for in a buyer, but we would just like to state that you should always do your research beforehand to find annuity buyers who will offer you a fair deal on your annuity payments.