Taxable Portfolio vs. Tax-Free Structured Settlement
The chart on the left compares the returns on two hypothetical $100,000 settlements. One is invested in conventional taxable investments at an interest rate of 6 percent. The other flows through a structured settlement earning the same rate.
After 20 years, the total net income generated by the lump sum settlement is $158,991. By contrast, the total net payout generated by the structured settlement is $213,994 - a 35 percent increase.
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Retirement Security with A Structured Settlement
A 55-year-old man is injured in an auto accident. His wife is 53. The couple's attorney negotiates a $250,000 settlement that the couple uses for their retirement when the husband turns 65.
The couple considers two secure investments: corporate bonds and a structured settlement. Compare the dramatic difference in after-tax returns. The structured settlement provides a 65 percent higher return than corporate bonds - and can't be called if interest rates drop!
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