If I receive a settlement check, is lump sum better than annuity?

If I receive a settlement check, is lump sum better than annuity?
0.0 0.0 0.0 0.0 0.0 0


I’m 28 with a great job but not much money in the bank and so I might need it more now than later (down payment on a house, maybe?)


The pros for lump sum are that you can use the money to pay off debt, down payment for a house, invest in the market.
The cons, depending on the settlement amount, a lump-sum may move you to a higher tax bracket.


Depends on the amount of the lump sum vs. the systematic annuity payments. From a behavioral finance perspective, I would suggest you be aware of how easy it may be to quickly spend an entire lump sum and have nothing to show for it. Thus, the annuity may be a better option if you know yourself and think that frivolously spending the lump sum is a real possibility.
Adam C. Harding, CFP
Disclosure: For informational purposes only. Not to be considered investment, tax, or legal advice. My responses on Nerdwallet are for educational purposes only and action should not be taken until a thorough analysis has been done by me or your financial advisor. Investing involves risk of loss and diversification does not ensure protection against risk of loss.


This thread has been closed. Have a financial question? Log in and ask our community!