Structured Settlement Calculator: Monthly Payout From a Settlement
Work out the monthly payout from a structured settlement — the steady, scheduled income paid out instead of a single lump sum.
Adjust the inputs and select Calculate for a full breakdown.
Compare Common Scenarios
How the numbers shift across typical situations for this calculator:
| Scenario | Monthly income | Total drawn | Growth while drawing |
|---|---|---|---|
| $400k · 3% · 15yr | $2,762.33 | $497,218.78 | $97,218.78 |
| $150k · 2.5% · 10yr | $1,414.05 | $169,685.82 | $19,685.82 |
| $1M · 4% · 25yr | $5,278.37 | $1,583,510.52 | $583,510.52 |
| $250k · 3.5% · 20yr | $1,449.90 | $347,975.83 | $97,975.83 |
How This Calculator Works
Enter the settlement amount, the rate the funding earns, and the payout term. The calculator finds the fixed monthly payout that pays the settlement out evenly across the term while the balance earns the rate.
The Formula
Fixed-Period Drawdown
PV = savings pot, r = monthly rate (annual ÷ 12), n = number of monthly payments
Worked Example
A $400,000 structured settlement earning 3% over a 15-year term pays about $2,762 a month. The payouts total roughly $497,200, since the balance keeps earning while it is paid down.
Key Insight
A structured settlement spreads a legal award into steady income, which protects against spending it all at once. Selling future payments for a lump sum almost always means accepting far less than their scheduled total.
Structured settlement basics + tax treatment
WHY structured settlement.
Substantial — substantial personal injury / wrongful death settlements.
Substantial — substantial substantial substantial tax-free.
Substantial — substantial guaranteed long-term income.
Substantial — substantial substantial protect against mismanagement.
Substantial — substantial substantial protect against creditors.
TAX TREATMENT.
Substantial — substantial IRC §104(a)(2) excludes from income.
Substantial — substantial principal AND growth tax-free.
Substantial — substantial substantial substantial substantial substantial.
Substantial — substantial vs lump sum invested — substantial tax advantage.
Substantial — substantial substantial higher net for same gross.
Substantial — substantial 'imputed' high pretax-equivalent return.
Substantial — substantial substantial substantial.
STRUCTURE typical.
Substantial — substantial defendant pays insurer (life insurance company).
Substantial — substantial insurer purchases annuity.
Substantial — substantial periodic payments to claimant.
Substantial — substantial substantial substantial substantial.
Substantial — substantial defendant no longer liable.
Substantial — substantial 'qualified assignment' substantial.
PAYMENT SCHEDULES typical.
Substantial — substantial lump + periodic combination.
Substantial — substantial monthly/annual payments.
Substantial — substantial substantial substantial life-only.
Substantial — substantial period certain.
Substantial — substantial life with period certain.
Substantial — substantial inflation-adjusted (less common).
Substantial — substantial deferred lump sums (college, retirement).
Substantial — substantial substantial substantial substantial substantial.
BENEFITS to CLAIMANT.
Substantial — substantial guaranteed income.
Substantial — substantial inflation-protected (if structured).
Substantial — substantial tax-free.
Substantial — substantial substantial — substantial substantial.
Substantial — substantial protection from creditors typically.
Substantial — substantial estate planning advantages.
Substantial — substantial Medicare Set-Aside (MSA) substantial substantial.
Selling structured settlements + factoring industry
SECONDARY MARKET substantial.
Substantial — substantial 'structured settlement factoring companies'.
Substantial — substantial JG Wentworth, Peachtree, etc.
Substantial — substantial buy future payments at discount.
Substantial — substantial substantial substantial controversial.
Substantial — substantial 'cash now' marketing substantial.
DISCOUNT RATES substantial.
Substantial — substantial 8-18% effective annual.
Substantial — substantial substantial substantial substantial substantial.
Substantial — substantial Treasury rate ~4% 2024.
Substantial — substantial substantial substantial substantial.
Substantial — substantial substantial substantial substantial substantial substantial.
Substantial — substantial substantial substantial substantial substantial.
EXAMPLE.
Substantial — substantial $100K future payments over 10 years.
Substantial — substantial 4% discount rate → ~$82K present value.
Substantial — substantial 12% discount rate → ~$58K factoring quote.
Substantial — substantial 18% discount rate → ~$45K substantial worst.
Substantial — substantial substantial substantial substantial substantial.
Substantial — substantial substantial substantial substantial substantial.
PROTECTION ACTS substantial.
Substantial — substantial 49 states have Structured Settlement Protection Acts.
Substantial — substantial court approval required.
Substantial — substantial 'best interest' test.
Substantial — substantial substantial substantial substantial substantial.
Substantial — substantial substantial substantial reduce 'lowball' offers.
Substantial — substantial cooling-off period.
Substantial — substantial substantial substantial substantial.
TAX consequences SELLING.
Substantial — substantial sale price NOT excluded under 104(a)(2).
Substantial — substantial substantial substantial taxable.
Substantial — substantial substantial substantial substantial substantial.
Substantial — substantial 40% federal excise tax on factoring purchaser.
Substantial — substantial unless court-approved 'qualified order'.
Substantial — substantial substantial substantial substantial.
WHEN TO SELL.
(1) Genuine financial emergency.
(2) Substantial — substantial higher ROI use of capital.
(3) Substantial — substantial debt > discount rate.
(4) Substantial — substantial substantial substantial.
WHEN NOT TO SELL.
(1) Substantial — substantial 'want it now' substantial.
(2) Substantial — substantial typical 50-60% present value loss.
(3) Substantial — substantial substantial substantial substantial.
ALTERNATIVES to sale.
(1) Loan against structured settlement.
Substantial — substantial substantial substantial substantial.
(2) Partial sale (some payments only).
Substantial — substantial keeps long-term security.
(3) Substantial — substantial financial counseling.
Substantial — substantial substantial — substantial.
RECENT trends.
Substantial — substantial Periodic Payment Settlement Act 1982 substantial.
U.S. structured settlement economics (2024)
Reference structured settlement + sale rates.
| Item | Detail |
|---|---|
| Tax treatment | Tax-free §104(a)(2) |
| Treasury rate (low-risk discount) | ~4% |
| Factoring company discount | 8-18% |
| Federal excise tax on sale | 40% (unless qualified order) |
| State protection acts | 49 states |
| Court approval required for sale | Yes (Structured Settlement Protection Acts) |
| Typical PV loss in sale | 50-60% (high discount) |
| Major factoring companies | JG Wentworth, Peachtree |
| Medicare Set-Aside (MSA) | Substantial substantial |
| Qualified Assignment | Defendant transfers liability |
| Common schedule types | Lump + periodic life / period certain |
IRC §104(a)(2) substantial tax exclusion. Sale to factoring substantial 50-60% PV loss + 40% federal excise tax unless qualified court order. 49 states Structured Settlement Protection Acts substantial — court approval + 'best interest' test. Loan against settlement substantial alternative. NSSTA + IRS + Periodic Payment Settlement Act framework.
Frequently Asked Questions
What is a structured settlement?
It is a legal settlement paid as a stream of scheduled payments over time, rather than a single lump sum, often funded through an annuity.
Why are settlements structured?
Scheduled payments provide stable long-term income and guard against spending a large award too quickly. They can also carry tax advantages depending on the case.
Can I sell my structured settlement?
Often yes, to a buyer for a lump sum, usually with court approval. The lump sum offered is well below the total of the future payments being given up.
Are structured settlement payments taxed?
Payments from a personal physical-injury settlement are often tax-free, but rules vary by case type. Confirm the tax treatment for your specific settlement.
Does this model custom schedules?
No. Real settlements can include lump sums and step-ups. This calculator models a level monthly payout across the term as an estimate.
When is this calculator unreliable?
Less reliable when discount rate appropriate uncertain (low-risk Treasury ~4% vs factoring company 8-18% substantial differ), when tax-free status not maintained (sale requires court approval + qualified order to avoid 40% federal excise tax), when Periodic Payment Settlement Act of 1982 compliance issues, when inflation adjustment vs fixed payments differ, when factoring company quotes substantial vary, or when state structured settlement protection acts (49 states) require court approval + 'best interest' test.
References & Authoritative Sources
- U.S. Internal Revenue Service (IRS) — Section 104(a)(2) Personal Injury Damages · consulted June 1, 2026 · Federal tax authority
- National Structured Settlements Trade Association (NSSTA) — Industry Standards · consulted June 1, 2026 · Industry trade association
- Periodic Payment Settlement Act of 1982 + state Structured Settlement Protection Acts — Federal + state framework · consulted June 1, 2026 · Federal statute
Related Calculators
Data Sources & Benchmarks
This calculator draws on 2 independent, dated sources. The starting values for annual rate are taken from the benchmarks below and refresh whenever the snapshots are updated.
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Methodology & Review
Structured settlement present value = sum of (each future payment / (1 + discount rate)^period). Calculator returns lump-sum equivalent + cashflow schedule. U.S. structured settlements typical from personal injury / lawsuit settlements; tax-free under IRC §104(a)(2); insurance company funded via annuity. Discount rates for sale to factoring companies 8-18% substantial. RELIABILITY: Reliable for documented payment schedule. Less reliable when (a) discount rate appropriate (low-risk Treasury ~4% vs factoring company ~12% substantial differ); (b) tax-free status maintained (must continue qualified status — sale to factoring company requires court approval); (c) Periodic Payment Settlement Act of 1982 compliance; (d) inflation adjustment vs fixed payments; (e) factoring company quotes substantial vary; (f) state structured settlement protection acts 49 states.
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