Are There Times When Selling Your Annuity Payments Might Not Make Sense?

19 Jun 2018 15:20
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The short answer to this question is yes. While we will talk about selling your annuity payments in this blog all of the time, we would be the first to also say that sometimes it does make sense to hold on to your annuity payments. Let's examine when it might actually make more sense keep your annuity payments until a later date when you might need them more.

First, let's talk about when you should definitely sell your annuity payments. If you need money because you have significant debt, you shouldn't wait and keep your annuity payments until you find the money. This make little sense as you are just paying more in interest and penalties.

The most common reasons why people decide to sell their annuity payments is due to credit card debt, mortgage debt, medical debt, college tuition or student loans, divorce, and new investment opportunities. However, these are not the only good reasons for selling annuity payments, so you might want to speak with your financial adviser to determine if there is a solid reason for selling your annuity payments.

When Is Selling Annuity Payments a Bad Idea?

If you are thinking about selling your annuity payments to finance a vacation, this is a bad idea. The same holds true if you don't actually need the money but want to sell your annuity payments for some reason. Annuity payments provide long-term stability. They are to be used for a steady income stream in your golden years.

The truth is that when you sell your annuity payments, you will not get full value on those annuity payments. The buyer is providing you with the benefit of getting cash now. In return, they will buy the payments at a discounted rate. It's a trade-off. If the trade-off is worth it then go for it. However, if you don't absolutely need the money, you shouldn't sell your annuity payments.

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