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.
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