Structured settlement annuities if used as a vehicle for periodic payments due to an accident, injury etc, are not get rich quick programs nor are they meant to be.
Because of the difficulty in getting out structured settlement money on a whim, such as, I want a new car, a cruise would be nice or whatever emergency you could think up, structured settlement annuities are a way to “get rich slowly”. Sometimes it is better, than being able to cash in your stocks, mutual funds or any other investment.
“The financial analogy is that having all your money in a savings or checking account is like having food in the refrigerator. Putting money in a mutual fund or certificate of deposit, where it takes some effort (and sometimes penalties and tax consequences) to cash it in, is similar to driving to the store two miles away. A structured settlement is like the 25-mile drive for food. You have to do a lot of work to sell it and take a huge financial hit when you do.
It is better just to hang onto the structured settlement and stay disciplined, just like it is better to stay on a diet.
There is something similar to a structured settlement called an immediate annuity. It pays income for a person’s life, just like a defined benefit pension plan. Although people seem to like lifetime income from a retirement plan, a Smart Money article stated what I long suspected: Few people buy them on their own.”
For more information on structured settlement annuities, read Don McNay’s article “Don’t Run Out Of Money Before You Run Out Of Time”.
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