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Q. I’m 47 years old and, after suffering a personal injury, have just been awarded a medical pension of $400 per month. The money is indexed annually and payable for life. I can opt for a cash-out and receive $120,000 upfront, but I’m unsure which is the smarter option.
My mortgage renews in 2020 and my current interest rate is 2.3%. I will have a mortgage balance of $380,000 on renewal. I receive a monthly pension of $2,300 from the job I just retired from, and will earn additional income when I return to work next year. Should I cash out and pay off my mortgage sooner, or keep the monthly pension?
–Vince
A. As you’ve discovered, Vince, settlements for personal injuries are often offered as structured settlements with monthly payments; or, you may be able to select a lump-sum payout in lieu of those ongoing payments.
The indexing feature you have been offered—such that the $400 per month rises based on some sort of measure of inflation—may sound enticing. And it is, to an extent, because it protects you against the rising cost of living…

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