Annuity payments offer quite a few benefits. They provide an ongoing stream of predictable income. They make it possible to know from month to month just how much income you have coming in, not counting any variable sources of income (a paycheck from an hourly job, for instance). However, annuitized payments might not be the best situation for your needs. You might be better off with a lump sum after selling your annuity payments. Should you sell your payments? Let’s take a closer look.
Not Selling – The Reality
First, let’s start with a look at what happens if you don’t sell. In reality, nothing will change with your situation, at least not in the immediate future. However, you might find that your payments are worth less and less over time, even though they remain the same amount. Inflation and the rising cost of living make the dollar worth less as the years go by, so what might once have been more than sufficient for your needs may end up being not enough. This will continue through the annuitized payment structure, with your payments staying the same but being worth less and less.
Selling – The Reality
Selling your annuity payments gives you a lump sum that’s based on today’s dollar value, not the depreciated future value of the dollar. That lump sum can be used for anything you want, from paying down high medical bills to refitting your home to accommodate a wheelchair. Of course, you sacrifice the dependable income stream offered by maintaining your annuity payments. However, if you invest your lump sum smartly, or even a portion of it, you can make up for that or even build a stronger stream of income.
In addition, you don’t have to sell all of your annuity payments. You can sell a specific number of payments – however many you want. You might choose to sell just enough payments to meet a specific financial goal. You might choose to sell most of your payments, but retain a portion against future need. It’s really up to you.
Considerations If You Decide to Sell
If you decide that selling your annuity is right for you, there are a few considerations you’ll need to make. First off, you need to make sure that your state laws allow you to sell your annuity. While most states do, some don’t. Second, you need to determine how much of your annuity you want to sell. Third, you need to hire an attorney to advise you throughout the process. Finally, you need to find a way to sell your annuity. That’s easier said than done if you don’t know where to start.
Selling an annuity isn’t like selling a used car. You need to find qualified buyers that offer a fair amount for your annuity. While you won’t receive all the money in the annuity if you sell, you should receive a significant percentage of it, and a reputable buyer will make a fair offer.