Lump Sum vs. Payments Calculator for Structured Settlements

How to use the calculator

Enter your payments, the lump sum you could get, and a yearly return you might earn on it after fees. The calculator grows the balance at that return and takes out each payment when it would have arrived.

If the money runs out before the last payment, the lump sum would not have replaced the income the payments provide. Try a lower return too: investment returns are never certain, while scheduled payments are set in advance.

Lump sum or payments: what to weigh

Payments give steady, predictable income, often for many years. A lump sum gives flexibility now, for example to pay off high-interest debt or cover a large expense, but it has to be managed and can be spent quickly.

Selling payments is usually expensive, because buyers apply a discount rate. Alternatives include selling only part of your payments, keeping them and budgeting, or other forms of financing. A fee-only financial adviser can help you compare these for your situation.

What return should I enter?

Use a realistic return after fees, and try a lower one as well. Returns vary from year to year and are never guaranteed.

Why does the money run out?

If the lump sum is much smaller than the payments are worth at your return, withdrawing the same amounts uses it up early. That gap is the cost of selling.

Does this include taxes?

No. Payments from a personal physical injury settlement are generally not taxable under federal law, but investment returns on a lump sum may be. Ask a tax professional.