Structured settlements have been a trusted financial tool for injured claimants and plaintiff attorneys for decades. Guaranteed periodic payments, tax-efficiency, and lifetime income security make structured settlement annuities a cornerstone of many settlement strategies. Yet in today’s economic landscape, structured settlements alone are often not enough to fully address the long-term financial goals of claimants or the strategic planning needs of attorneys. Volatile markets, rising costs of care, and evolving financial needs require a retooled strategy.
That doesn’t mean structured settlements are inadequate. Far from it. But a well-rounded settlement strategy increasingly includes fixed annuities and growth-oriented options, providing the best combination of stability and growth potential. This approach works in two key arenas:
- Claimant settlement plans, where financial security and long-term income stability matter most.
- Plaintiff attorney fee deferral strategies, where a balance of predictable income and long-term growth can stabilize cash flow over years, not just months.
In this article, we’ll break down why modern cases benefit from a blended approach, show how structured settlements fit into that approach, and offer guidance on how to create long-term success.
The Traditional Role of Structured Settlements
Before we explore why structured settlements are no longer the only answer, it’s worth reaffirming why they remain a powerful tool:
- Tax Advantages: For personal injury, workers’ compensation, and wrongful death claims, structured settlement payments are income tax-free to the claimant. This can maximize after-tax dollars for life’s needs.
- Guaranteed[1] Income: Unlike investing in the market, structured settlement annuities provide a guaranteed income stream that cannot be lost to market downturns.
- Customized Payout Schedules: Payments can be tailored to match life events — college costs, retirement, inflation-adjusted income, and more.
The strength of structured settlements is their predictability — a financial safety net that continues regardless of market swings or economic uncertainty. That’s why articles like Structured Settlement Annuities: A Buffer Against Economic Uncertainty remain relevant: they remind claimants and attorneys alike that structured settlement annuities bring meaningful peace of mind.
Why Solely Relying on Structured Settlements Is No Longer Enough
While structured settlements offer certainty, they don’t always address every financial objective in modern settlements:
1. Inflation and Rising Costs of Care
Economic forces have increased the cost of medical care, housing, and long-term support services. The predictable periodic income from a structured settlement is valuable, but it may not keep pace with inflation over decades, especially for younger claimants who will live with settlement proceeds for 30+ years.
2. Opportunity Cost of Growth
Fixed annuities are designed to provide consistent income, not market-linked growth. Long-term investment returns, particularly in diversified portfolios, may outpace fixed annuity growth. When creating a settlement plan, it can be financially prudent to include growth-oriented options tailored to a claimant’s risk tolerance and goals.
3. Changing Needs Over Time
A claimant’s financial needs will evolve. What works best shortly after settlement may not be ideal ten or twenty years later. Incorporating market-based structured settlements, fixed indexed annuities, or other growth vehicles within a settlement plan gives flexibility for future goals such as:
- Paying for children’s education
- Funding long-term care
- Building legacy wealth
Structured settlements remain important. But they function best as one component of a diversified approach.
The Role of Growth-Oriented Options
Expanding beyond traditional structured settlement annuities means exploring additional financial vehicles that offer more growth potential. The most commonly used options include:
Market-Based Settlement Strategies
Market-based structured settlements allow a claimant to use a market-related investment portfolio that may offer greater potential growth over time. Portfolio options can be tailored to the claimant’s risk tolerance and financial goals. These strategies are especially relevant when long-term goals extend beyond guaranteed fixed income.
Fixed Indexed Annuities
Fixed indexed annuities combine downside protection with upside potential linked to a market index (such as the S&P 500®). While returns aren’t directly tied to investments in the market, index-linked interest crediting can offer attractive returns without risking principal.
Putting It All Together: A Well-Rounded Claimant Settlement Plan
A robust settlement plan is a financial roadmap that balances:
- Stability through a predictable source of income
- Growth potential through market-related options
- Future flexibility ensuring financial tools match life’s changing needs
Step 1: Clarify Priorities
Begin with a conversation about:
- Immediate cash flow needs
- Future obligations (e.g., education, care, retirement)
- Income security
- Growth goals
This helps determine how much of the settlement should be allocated to each component.
Step 2: Use Structured Settlements for Baseline Security
Structured settlements are ideal for covering essential, ongoing needs such as:
- Monthly living expenses
- Ongoing medical costs
- Protection against outliving one’s funds
Their tax advantages and guaranteed1 payments are essential for financial stability.
Step 3: Layer on Growth-Oriented Options
For funds not needed immediately or for long-term legacy goals, consider:
- Market-based structured settlements
- Fixed indexed annuities
- Diversified investment portfolios
These can help preserve purchasing power and build wealth over time.
Attorney Fee Deferrals: Beyond Lump-Sum Fees
Just as a claimant has long-term financial goals, plaintiff attorneys often seek ways to:
- Level firm income across years
- Defer taxes
- Create reliable future revenue streams
Attorney fee deferrals have grown in popularity as part of comprehensive financial planning for law firms and individual practitioners. A thoughtful fee deferral strategy uses similar principles to claimant settlement planning:
- Predictable income
- Tax-deferred growth
- Planned timing of cash flow
Structured settlement annuities are the traditional vehicle for fee deferral, but they’re no longer the only option.
Diversifying Attorney Fee Deferral Portfolios
Like claimant settlement plans, attorney fee strategies can blend:
Structured Settlement Annuities
These deliver periodic payments over an agreed timeframe, with tax deferral benefits that help plaintiff attorneys retain more of their earnings. In some instances, the deferred income strategy may allow the attorney to remain in a lower tax bracket than if the attorney had accepted the fee as a cash lump sum.
Indexed Products
These may offer:
- Predictable returns
- Enhanced growth potential
- Greater flexibility in payout scheduling
Growth-Oriented Fee Deferral Options
In some cases, attorneys may benefit from products that blend tax deferral with exposure to investment performance, allowing them to capture more financial upside over time.
Our blog post Secure Your Future with Attorney Fee Deferrals offers deeper perspective on how deferring fees can be integrated into long-term financial planning.
Why Engaging a Settlement Consultant Matters
With all these options available, the guidance of an experienced settlement planner is invaluable.
At Sage Settlement Consulting, we work collaboratively with attorneys and claimants to:
- Assess financial objectives
- Understand legal and tax implications
- Custom design settlement plans that fit individual needs
- Coordinate with insurers and investment partners
Our consultants help translate complex settlement options into clear recommendations. That’s why integrating settlement consulting early in your settlement process can produce better long-term outcomes.
The Future of Settlement Planning Is Blended
Structured settlements remain a vital, valuable part of both claimant and attorney financial planning. Yet the complexity of modern financial needs means that sole reliance on structured settlements is often not enough. By combining multiple options, you create a plan that’s not only secure, but adaptable, efficient, and designed for long-term success.
Whether you’re an injured claimant trying to ensure lifetime financial stability, or a plaintiff attorney considering how your fees can fund your future goals, a well-rounded strategy built with professional guidance is essential.
Ready to explore your options? Visit the Sage Settlement Consulting blog for more insights and detailed explanations on key topics like attorney fee deferrals and settlement planning strategies.
[1] Guarantees are subject to the claims-paying ability of the issuing insurance company.