Starting in 2017, more than five million pensioners in the United Kingdom will finally be able to sell annuity payments for a lump sum of cash, and financial experts expect many of them to do exactly that. Here in the States, selling your annuity payments is already a common practice, as is getting cash for your structured settlement or lottery windfall.
As with any other issue, you’ll find plenty of people offering advice on both sides of the issue, should you sell or should you keep your annuity? In England, many retirees were talked into buying low-value annuity products in the 90s, and many are now eager to finally unload those financial products. For many, selling fixed annuities will offer them a lifeline.
In the United States, you’ll find no shortage of financial advice urging people to think carefully before selling fixed annuity payments. There’s just one major problem with this advice. Almost without fail, these articles are written by economists with an MBA from an Ivy League University, or a financial advisor who wouldn’t be caught dead with a lottery scratcher. In short, people who are financially secure and can spend all day arguing about arcane financial products 99% of Americans don’t understand.
For many people, the realities of debt hardship and overdue bills make this a simple choice indeed. Today, more than 40% of U.S. families are spending more than they earn. Student loan debt has reached a critical mass of $1.3 trillion, while outstanding auto loans are almost at the $1 trillion mark as well, at $943 billion in 2015.
For people with overdue credit card bills, medical bills, or eviction notices on their front door, selling an annuity payment is one of the few choices available to them, and shouldn’t be sneered at by some financial advisor with an MBA from Harvard.
Like the countless pensioners in England looking for a better quality of life, paying off your debt fast is a tempting lure indeed. Still others were talked into buying an inferior annuity product pre-retirement, which is the reason the laws in the UK are changing in the first place.
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