Fixed income settlements and annuities are appealing because people are looking for constant cash flow once they retire. Financial security is the primary reason why these financing options are highly considered by individuals.
After all, who would not want to enjoy his life once he stops working and goes into retirement? In fact, for a person who has worked for more than three-quarters of his life, he deserves it. However, no matter how attractive the promise of a lifetime of income is, you should do some research before taking these options.
Structured Settlements vs. Lump Sum Settlements
Having been involved in a personal injury case can affect a person’s life in many aspects. Aside from the medical bills that have to be settled; if he is the breadwinner, his family will have to find ways on how to find supplementary income while he still cannot work.
In such cases, it may give the claimant a lump sum as a one-time settlement or the court may rule that structured settlements be given to the victim. When there is no assurance when a breadwinner can come back to work and medical checkups need to be periodically done, a structured settlement may be a better option for the family. In case you are receiving structured settlements and you have a large urgent expense, you may look into cash for structured settlements offer by some financial companies.
Advantages and Disadvantages of Fixed and Immediate Annuities
People who are nearing their retirement age and are looking for an investment vehicle that will start paying them in just a year give much consideration to purchasing immediate annuities. With a lump-sum purchase, the annuity company will pay the retiree a fixed amount every month once he has retired. This fixed payment will continue for the rest of the investor’s life. While this may seem too good to be true, there are downsides to immediate annuities.
When you paid a large amount to purchase the annuity, consider it as money that you have lost to the annuity company. While the company pays you a certain amount monthly, you are not going to get this money back in full until about 15 years of receiving payments from the company. It is only after that time that you will start receiving money beyond your initial investment. Since it takes time to earn from the investment, some people consider selling annuity in favor of other retirement investments.
Maintaining a Balanced Retirement Portfolio
Every financial investment has its advantages and disadvantages. This is why it is very important to determine your financial goals before you make any investment and to weigh all the risks. To be better take care of your finances, do not put all your eggs in a single basket. Well-researched investments in company stocks and bonds can yield great returns. There are many Self-Invested Personal Pension (SIPP) companies that invest the pension funds in high-risk investments. But there are many SIPP mis-selling.
If you are looking for retirement-appropriate investments, you can combine social security and pension plans with other investments. A diverse portfolio is one of the best ways to protect yourself from the fluctuations of the financial market.