Spending, Saving, or Structuring
The short answer: You generally have three choices. You can spend the money, save or invest it, or structure it into guaranteed payments that arrive over time. Most people use some combination of all three. The right mix depends on what you need now, what you will need later, and how much of your money you want shielded from taxes and market risk.
Why This Decision Feels So Hard
You have probably never made a decision like this before. Most people haven't.
It arrives at a difficult time, often while you are still recovering or still adjusting to a change you did not choose. There is no practice round. And unlike most financial decisions, this one is not easy to undo once it is made.
That is a lot to carry. It helps to slow the decision down and look at each option on its own.
What Are the Three Options?
Spending. Some of your settlement likely needs to go to work right away. Medical bills, past-due expenses, home modifications, a reliable vehicle, or time away from work while you recover.
Saving or investing. You can place the money in a bank account or an investment account and draw on it as needed. You keep full control and full flexibility. You also carry the risk if the market falls or if the money is spent faster than expected.
Structuring. You can place some or all of the settlement into a structured settlement, which pays you a guaranteed amount on a schedule you choose. Monthly, annually, in future lump sums, or a combination. The payments are set before the settlement is finalized.
Is Settlement Money Taxed?
For most personal physical injury settlements, no. The money you receive is generally not treated as taxable income.
That is true whether you spend it, save it, or structure it. This part is the same across all three paths.
What Happens to the Money After You Receive It?
This is where the paths separate, and it is the part most people are never told.
Once a lump sum is in your hands and you invest it, any growth on that money is generally taxable. Interest, dividends, and gains all become part of your annual tax picture. So do any management fees your account charges.
With a structured settlement, the growth built into your future payments generally stays tax-free. There are no management fees taken out along the way.
Two people can settle for the same amount and end up with meaningfully different totals over twenty or thirty years, based only on this difference.
Do You Have to Choose Just One?
No, and most people don't.
“You don't have to choose between taking cash now and protecting money for the future. A good settlement plan can do both, and my role is to help you find the balance that makes sense for you.”
Josh Carter, Ringler Colorado
A common approach is cash upfront for immediate needs, then a structure for the expenses you know are coming. Ongoing medical care. Housing. A child's education. Replacement income.
You decide what goes where. Nothing has to be all or nothing.
Is Structuring Only for Large Settlements?
No. Ringler works with settlement cases ranging from $50,000 to $100 million.
Structured settlements are used across a wide range of case sizes, including workers' compensation and medical malpractice cases of modest value. If you have future expenses you can name, the size of the settlement matters less than you might expect.
How Do You Decide?
A few questions worth sitting with:
- What do I need this money to cover in the next twelve months?
- What will I still need it to cover in ten years?
- If this money were gone in five years, what would happen?
- How much of this do I want to have to manage myself?
There is no single right answer. There is only the answer that fits your life, your health, and your family.
Talk It Through Before You Decide
A Ringler consultant can walk you through what each option would actually look like for your situation, using real numbers rather than general examples. Ringler works on nearly 9,000 cases a year, with consultants located in offices across the country.
There is no cost to have the conversation, and no obligation to structure anything.
Find a Ringler consultant near you: ringlerassociates.com/consultants
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