Rescue Capital Blog Your Money, Your Way

26Jun/12Off

Thinking about selling your annuity? Give it some thought

Posted by Dawn Anderson

Feeling uneasy about your money situation? You’re not alone. Many people feel exactly the same way. Sometimes it helps to get the advice of a financial expert to explain all your options and help you determine the best course of action. This is also true when you sell your structured settlement annuity payments. While selling the rights to your future payments isn’t for everyone, having a professional available to review your options can aid you in your decision.

Rescue Capital can answer questions about selling your annuitiesWhen you’re looking to sell all or part of your future payments in order to fulfill financial obligations the decision isn’t one that should not be taken lightly. The value of your money and the extent of your need to receive your funds ahead of the scheduled payments are primary factors. Sometimes it makes more sense to take your payments in a cash lump sum rather than borrowing money at a high interest rate.

Avoiding foreclosure and paying off debt are just a few examples of why you may need to get your payments ahead of schedule. Life changes and having a lump sum of cash can help you get through tough times. Since you can’t always plan for the unexpected, it’s always best to know your options. This is where Rescue Capital come's in.

There is more than one way to get cash from a structured settlement or annuity. For instance, it isn’t necessary to sell all of your structured settlement or annuity payments. In many instances your immediate financial needs may not require that you to do so. Selling part of your future payments could be more than enough to pay unexpected bills while continuing to receive your scheduled payments.

Again, it can be difficult to navigate through all of your potential options on your own. It is important to research what the possibilities are and seek the help from someone in the know. Rescue Capital, a firm that buys structured settlements and annuities, can clear up the confusion and cut through any potential red tape that you might encounter at sale time. The money that you were awarded in your settlement is legally yours so shouldn’t you use it in a way that works for you?

Call Rescue Capital 866.688.3532 today to learn more and to receive your free no-obligation quote.



21Jun/12Off

Bad credit not relevant with structured settlements

Posted by Dawn Anderson

When you’re suffering financially, waiting for payouts from a structured settlement annuity isn’t the most convenient way to get bad credit ok at Rescue Capitalmoney.  Clearly it would help if you can have access to your money sooner perhaps in a lump sum payment. Maybe you thought about looking into it before but delayed calling because you have bad credit and were afraid you wouldn’t be approved. The good news is that selling your future payments allows you to get the cash you need without borrowing money. It is not a loan it is a transfer of the legal rights to your future payments. So there is no money to pay back or credit approval.

The only way to improve your credit is to pay off your debt and selling your structured settlement could be the key to financial stability. Use the cash lump sum to pay off your credit cards or avoid foreclosure and invest the remaining funds to start earning interest for you. It is time to take control of your finances and reap the benefits of your money.

Working with Rescue Capital to sell your structured settlement for a lump sum has some benefits too. We can custom tailor the package to suit to your needs and goals. They can help you develop a plan to pay off your debts and work with your creditors to pay off the debts immediately. We’re also here to answer your questions without delay. Remember, the money is legally your property so why not use it to suit your needs.

You don’t have to sell you entire settlement. You can sell only part of your settlement, keeping some of your scheduled payments and have an influx of cash for your immediate needs. Cashing out your structured settlements can give you more financial freedom which is something everyone can use.

Don’t delay getting the facts about your financial situation. Call Rescue Capital today to discuss your situation and make your structured settlement to work for you. Call 866.688.3532 for your free no-obligation quote.



7Jun/12Off

Structured Settlement Surveys: Are they statistically relevant?

Posted by Dawn Anderson

Last week J.G. Wentworth released a press release stating that only 6.6% of structured settlement recipients sell their future payments and that those who do sell commonly cite getting out of debt, purchasing a home or vehicle, unexpected medical bills or continuing their education as reasons for selling. [i]

The press release stated that the study was based upon data collected by J.G. Wentworth over the past 20 years but it did not provide any further details regarding the data collection. For instance, how did they obtain the data; how many people were included in the study and did it include data from other factoring companies besides J.G. Wentworth/PeachTree? In addition, there was no mention as to whether discount rate played a considerable role in the annuitants’ decision to sell.

Back in 2008, J.G. Wentworth published an email survey of 115 respondents who previously sold some or all of the payments to J.G. Wentworth in exchange for a lump sum payment. In this survey, only 18% said they were completely satisfied with their structured settlement. 31% said they didn’t wish that there attorney negotiated a single lump sum payment which means that many of them would have liked a lump sum payment. 60% of the respondents sold their payments to pay bills while less than 5% did so in order to buy a house. 30% stated that they would not sell their payments again. J.G. Wentworth only released 9 questions to an industry blogger and did not reveal the remaining questions, the number of individuals the survey was sent to or any other circumstances that could have skewed the results of the survey.[ii]

In the 2006 The National Structured Settlement Trade Association (NSSTA) survey of attorneys involved in structured settlements (43 telephone surveys) and structured settlement recipients (1275 telephone and Internet surveys) 75% of annuitants were happy with their structured settlement and would recommend one. [iii]

In an AIG survey of 1,000 participants, 65% of respondents said they would elect a lump sum payment, while 26% stated that a lump sum was more appropriate to pay bills.[iv]

So if that many people wanted a lump sum payment then why aren’t they selling? In a review of 100 recent factoring transactions it was revealed that the average discount rate was 13.75% with 7.5% being the lowest and 20% being the highest. So you have to question whether the 93.4% of individuals that chose not to sell would have changed their mind IF the discount rate was closer to the 7.5% rate.

As structured settlement annuity premiums continue to decline (10% from 2010 and 20% from 2008)[v], there will be fewer annuitants available to market. While it seems perfectly logical that this would in fact lower the discount rate, if one looks at current trends it mostly will not occur.

For example, the top three companies spend millions of dollars a year in order to entice annuitants to sell. They’re all well established and are household names. Smaller, lesser known companies cannot afford to go head to head in advertising spends with these industry giants so they tend to focus on non-traditional marketings. While some sellers will seek out these smaller players in order to obtain better rates more often than not a first time seller will call one or two companies they see on TV. Which basically means they are going to receive rates of 13% or higher.

While the decline in annuities does not currently seem to be an issue for J.G. Worthworth/Peachtree who already completed a $244 Million Securitization this year[vi], one has to wonder whether primary market decline and increased competition combined with well informed, tech savvy consumers could adversely affect their business in years to come.

J.G. Wentworth had securitizations worth $469,000,000 in 2011 and $579,000,000 in 2010.[vii]  This represents 9.4% and 10% of the annual premiums for those years.


 



4Jun/12Off

Boston College’s Center for Retirement Research suggests using Social Security for Retirement

Posted by Dawn Anderson

The Center for Retirement Research at Boston College released a study stating that the best way for people to utilize their retirement income more effectively is to “buy” an annuity from Social Security. This statement, of course, is completely misleading and the whole concept should be investigated further[vi]

According to Pat Foley, president of U.S. life insurance distribution and marketing at Genworth Financial, approximately 10,000 people turn 65 every day and this will continue over the next 20 years.[i] As these individuals approach retirement age armed with only their 401k plans and Social Security as their only means of support once they stop working, there is a huge need to minimize risk while preserving wealth. Fluctuation interest rates as well as longevity are all issues to consider. Obviously, no one wants to outlive their savings or pay huge fees to protect their nest eggs but recommending Social Security as an option seems a little optimistic.

No one can “BUY” an annuity from Social Security. You delay claiming your Social Security benefit in order to get a higher pay out later. Instead you’re using your savings to support yourself. Here’s the one major problem with that. What if you spend your cash supporting yourself to hold off for the higher Social Security payout only to discover there is nothing left when it comes time for you to retire?

In their 2011 report, the Social Security Board of Trustees stated that by “2023, total income and interest earned on assets are projected to no longer cover expenditures for Social Security, as demographic shifts burden the system. By 2035, the ratio of potential retirees to working age persons will be 37 percent — there will be less than three potential income earners for every retiree in the population. The trust fund would then be exhausted by 2036 without legislative action.”[ii]

Therefore if you didn’t invest your money, decide to live off your cash and use Social Security as your annuity you could be in for a rude awakening come 2036. While annuities do have their faults—they’re expensive, underperformers and restrictive—for the most part they do provide risk adverse individuals with a guaranteed income stream.

Some products, like Indexed annuities, take hybrid approach from variable and fixed annuities because they have stability of a fixed annuity with the growth potential of a variable annuity. Indexed annuities have a loss provision which protects the nest egg even if the stock market goes down. Unless you make a withdrawal, the value of your annuity will not decrease. The insurance company invests most of the principal in bonds ensuring the policy generates a small annual return. In addition, the insurer uses a small portion of the premium to buy options in a stock market index such as the S&P 500. Options that are exercised can result in additional interest credited to a policy.  As the demand for more risk adverse products rise, insurers will create newer products with better growth potential. [iii]

Apparently other government entities believe that annuities would be a good investment vehicle for retirement. In July 2011, US Government Accountability office (GAO) put out a report stating purchasing an income annuity from an insurance company is “an alternative to self-managing periodic distributions from savings" because it protects retirees from underperforming investments, overspending as well as from the risk of outliving their savings. It also claimed that inflation adjusted annuities reduces the risk of diminished buying power. Also some experts dispute that claim.[iv]

Other things to consider

Some investments allow the investment to be passed on to heirs. Social Security survivor benefits are for spouses and dependent children as well as disabled children only. If your financial situation changes some investments like annuities are not easily converted into cash. Some can’t be cashed out without suffering penalties and some cannot be cashed out at all once you start collecting. While some annuities can be sold on the secondary market for a discount, some cannot. Social Security, on the other hand, can not be liquidated or sold.

When it comes to retirement savings you’re never too young to start saving. It is also important to consider asset allocation and getting professional advice. Asset allocation is not putting all your eggs in one basket so if things go wrong in one investment class you don’t lose everything. [v] If you rely solely on one type of investment, especially one that is extremely inflexibl,e you’re leaving yourself open to possible financial hardship in the future.

[i]http://rescuecapital.com/blogs/2012/01/genworth-re-enters-the-indexed-annuity-market/