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Risk-Averse Settlement Strategies for Seniors

Risk-Averse Settlement Strategies for Seniors
Sage Settlement Consulting

Adults aged 65 and older who receive personal injury settlements may face unforeseen, financially devastating implications. The National Council on Aging (NCOA) reports that many adults aged 65+ rely on Social Security as their primary income source. Even those above the Federal Poverty Line struggle to meet their monthly expenses due to rising healthcare costs and affordable housing access. Individuals with robust retirement portfolios are not immune to financial woes, either—medical costs can quickly eat into a nest egg.

The following strategies help seniors across the financial spectrum preserve more of their settlement funds:

Retired Seniors & Seniors on Medicare

Rather than accepting a cash lump sum, senior claimants may want to safeguard and grow their funds by receiving guaranteed1, tax-free income via a structured settlement. The structured settlement payments will not impact any Social Security retirement benefits or Social Security Disability Insurance (SSDI).

Seniors on Medicare may need to place a portion of their settlement funds in a Medicare Set-Aside (MSA) to pay for litigation-related medical costs. Funding an MSA with a structured settlement is usually more cost-effective than funding the MSA with a lump sum.

Low-Income Seniors

Seniors who receive needs-based benefits like Medicaid, SSI, SNAP (food stamps), and subsidized housing (Section 8) should take extra care when accepting settlement funds. A payment could cause them to exceed the asset threshold for their benefits. These elderly claimants should consider a Pooled Special Needs Trust that they may or may not fund with a structured settlement. Pooled Special Needs Trust distributions are not countable assets, and distributions can pay for needs that are not covered by government benefits.

Legacy Planning

Senior claimants who do not need their settlement funds to cover their current expenses may want to consider setting the funds aside as an inheritance for their loved ones by establishing a trust. Using a structured settlement to fund the trust combines the structure’s tax-free, guaranteed payments with the trust’s ability to provide liquidity and market-correlated investment growth.

Contact Sage for Senior Settlement Planning

For more information about creating settlement plans for elderly adults, contact your Sage consultant today.

1 Guarantees are subject to the claims-paying abilities of the issuing insurance company.

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