Covering Large Expenses
Buying a car after yours breaks down, covering medical expenses, paying for a divorce — these are all life events you may not be able to foresee. When they occur, they almost always come at a cost and need to be addressed immediately. Selling all or part of your annuity payments can give you the flexibility to adapt to these life-changing circumstances.
A lump sum of cash allows you the freedom to alleviate larger debt, rather than receiving smaller periodic payments. While income in any form can be helpful, an influx of cash may be the answer to your current financial woes.
Here are some of the major life events you might be able to afford after receiving immediate access to your annuity payments.
Buying a Car
Life doesn’t stop because your car stops. If you know you can’t rely on your vehicle to live the life you want to live – like getting to work on time and being able to spend time with family – then it’s probably time to get a new one instead of continually repairing a lemon.
Access to your annuity savings could provide the down payment you need for a new or used car. Buying a new car is the most expensive option — not only will the car itself cost more, but a new car will also lose around 22 percent of its value in just the first year. However, new cars will need fewer repairs than used and will last longer.
Buying a used car is a great way to get a safe, reliable vehicle for less money. Many car dealerships offer cars that are “certified pre-owned,” meaning the manufacturer has examined, refurbished and certified the vehicle.
Purchasing a Home
Owning a home is one of the biggest financial decisions you can make. Buying a home turns part of your living expenses into assets. Instead of paying someone else, you’re paying yourself in equity.
For prospective home buyers, using an annuity lump sum can help secure an affordable mortgage. Putting money toward a down payment offers significant long-term savings on your home – decreasing interest, loan principal and monthly payments.
Increasing a down payment for a $300,000 home by just 5 percent can reduce the total cost of the mortgage by as much as $30,000.
With more money invested in the house via a down payment up front, you’re showing the bank you’re serious, and you’re also saving yourself money.
Paying Off Debt
The average U.S. household owes $7,281 on credit cards. Add in a mortgage, car payments and student loans, and it’s easy to see how you can get stuck. For some, a small amount of debt that goes unpaid can grow over time thanks to interest rates and late payment fees. For others, unemployment and underemployment doesn’t accommodate high costs of living.
Access to your annuity can minimize your debt and set the stage for better budgeting habits. Establishing a successful budget requires you to make a long-term strategy for managing money.
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Covering Medical Expenses
Poor health, which may lead to numerous tests, scans and doctor bills, can cause debt. Debt collection agencies contact nearly 51 million Americans about outstanding medical bills each year. Ignoring these bills can have serious implications, including damage to your credit score, home liens and even being served in court.
11 percent of Americans have liquidated a retirement account to pay for medical expenses.
Selling part or all of your annuity savings can be your answer to becoming financially free. In the event you have larger debt that requires your immediate attention, your annuity savings can help you through emergency situations.
Affording Your Divorce
Admitting a relationship is over can be emotionally difficult, but proceeding with the decision to divorce can also be financially devastating. On average, a divorce in the U.S. can cost more than $10,000 in legal fees, mediation fees, annuity surrender fees and other expenses. Selling your annuity payments can help to minimize your divorce fees, alleviating stress from financial woes.
Trying to split assets amicably can take months or years in court. It is highly recommended to have legal counsel during this process to protect your rights and identify reasonable portions of shared investments.