3 Reasons Why You Should Consider a Lump Sum Payment
When giving the option of taking a lump sum payment or receiving monthly payments for the rest of your life, it can be confusing trying to figure out what the better option is going to be. Many feel that getting a monthly payment provides them with a sense of stability in that they will have a guaranteed income for the rest of their life. However, taking a lump sum payment comes with its own set of benefits as well. Confused on which option is the right one for you? Don't be. Check out the reasons below as to why a lump sum payment is right for you.
Longevity
Does it seem like your family tends to live a long life? When you have a good chance of living to be 100, you want to make sure you are going to have the freedom to invest your money how you see fit. With a lump sum payment, you can make sure your money is going to last far longer than what you ever imagined. You are in complete control of where you want to invest your money and how you want to spend it.
Tax benefits
If you collect a payment every month, you are going to be responsible for paying federal income taxes on it. On the other hand, those who take a lump sum payment are only going to pay taxes on the money when they need it. Roll the payment into an IRA and only pay taxes on the dollar amount you withdraw from it. By the time you reach 70.5, the IRS will insist that you take a certain amount out and pay taxes. However, the minimums required are quite low, which means you would still pay less in taxes than what you would if you had taken a monthly payment.
Benefits for your beneficiaries
Once you do pass away, all of the money that remains behind will be passed along to your beneficiaries. If you had taken the monthly payments, the benefits would have ended upon your passing. Nothing would be left for your children. By taking the lump sum payment, you are leaving money for your spouse to live off of until they pass away. After that, the children will get whatever is left.
In taking the lump sum payment, you are providing a secure financial future for your beneficiaries and yourself. For more information, take a look at websites like myLumpsum.com.
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