A structured settlement should appeal to any senior, including a retired individual or one who is at or near retirement age. One of the biggest concerns of the elderly is running out of income. According to Met Life's 2003 Employee Benefits Trend Study, 48% of employees rank "outliving their savings" People are living longer. According to the New England Centenarian Study, people over 100 are the fastest growing segment of the population in the USA with people over age 85 as the second fastest growing segment! According to USA Today, the number of Americans aged 70 and older is expected to double by 2035¹. Fewer employees today can rely on the old fashioned defined benefit pension plans (when employers save for them and guarantee lifetime income) and recent market volatility has hurt 401(k)s and other defined contribution plans. Typically, such an individual will be risk averse and attracted to the safety, security, and guarantees inherent in a structured settlement. Another significant factor is that earnings distributed from "annuities" are not considered in the calculation of taxes on Social Security income as are CD's, Municipal Bonds, etc. The payments can be designed to maximize current income, as well as provide for beneficiaries such as a spouse, children, or grandchildren.

Here is an example of what can be done² :

A married couple, both age 65 have $100,000 to structure. One option is to provide an income tax-free monthly benefit of $610.77, Joint and 75% Survivor³ with a 15 year guarantee. This provides a guaranteed income of $610.77 per month for 15 years. Thereafter, the couple continues to receive $610.77 per month until the death of one spouse. The surviving spouse then receives monthly benefits of $458.08 (75% of $610.77) for the rest of his/her life.

• The level of monthly income is generally greater than what can safely be obtained (after-tax) from other conservative investments, without the uncertainty and volatility;
• Claimants with health impairments may benefit from a rated age and use the resulting savings on the cost of annuity payments to help offset the increase in life or second-to-die life insurance⁴ premiums resulting from the same condition;
• Guaranteed monthly payments could be paid to children or grandchildren. Some Life carriers offer a commutation rider which would serve to pay any remaining guaranteed payments to the children or grandchildren in a lump sum
• As an aside, Joint & Survivor payments can also be made at 100% where the payments continue unreduced at the first death to the surviving spouse

In the above example, the certain amount our couple would receive is $109,938.60, while the expected amount (to the end of joint normal life expectancy) would be $154,982.89. The income tax-free rate of return on the aforementioned structured settlement option (based on their combined life expectancy) is 4.44%, while the approximate taxable equivalent yield is over 6.17% (assuming a 28% marginal tax rate). According to www.Bloomberg.com, on 11/27/2007 the tax-exempt municipal bond rate for 15 years was 4.41%. Bear in mind the bond term is fixed at 15 years, after which the principal would need to be reinvested at then current rates, which could be higher or lower. Thus the utilization of municipal bonds would not be able to contractually guarantee lifetime income as the structured annuity would.

We can design numerous plans to fit your individual client's needs. If your client's financial circumstances are such that they still have a sizeable nest egg and have a more aggressive approach to investing, then a variable structured settlement may be appropriate