An article on Bloomberg.com recently told of the plight of Alicia Munnell, a Harvard Ph.D., former member of the president’s Council of Economic Advisors and two-decade veteran of the Federal Reserve Bank of Boston. Munnell, now age 72, made a series of poor financial decisions that has her wondering if she’ll have enough money to live on when she eventually retires.
Her biggest mistake was to pull from her retirement savings to pay for things she wanted now. She used her 401(k) money, as she put it, “like a bank account.”
Although life’s circumstances are different, the similarities between her actions and the actions of many injured parties suddenly in receipt of large lump sum settlements are strikingly similar. Not sure how to manage money, the urge is to spend today without thinking about tomorrow’s needs. When tomorrow finally comes, panic sets in when there is not enough money to make ends meet. Fortunately, Munnell was able (she hopes) to right the ship. Injured claimants may not be so fortunate.
I suggest bringing in a structured settlement broker as part of the settlement discussions. The broker can go over the use of annuity-backed settlement payments with claimants to see if a structured settlement plan makes sense for their current and future financial needs. In many cases (not all), a structured settlement can be a game-changer—making the difference between a lifetime of financial security and a lifetime of financial worry.
Click here for the complete Bloomberg article.