A structured settlement calculator helps you determine the present value of periodic payments using the time value of money. Whether you are evaluating a lump sum buyout offer, comparing discount rates, or simply understanding what future payments are worth in today's dollars, this free calculator gives you instant answers with a detailed payment schedule and multi-rate comparison table.
Payment Details
Set 0% for level payments, up to 5% for increasing payments
At a 9% discount rate, the present value is - of the total undiscounted payments. You would receive roughly - cents on the dollar.
Discount Rate Comparison
| Discount Rate | Present Value | Discount Amount | Cents on Dollar |
|---|
Payment Schedule
| Period | Payment | Present Value | Running PV Total |
|---|
Disclaimer: This calculator is for educational and informational purposes only. It is not financial or legal advice. Structured settlement transactions are regulated and require court approval in most states. Always consult a licensed financial advisor and attorney before selling structured settlement payments.
How to Use This Structured Settlement Calculator
A structured settlement provides periodic payments over time instead of a single lump sum. While these guaranteed payments offer financial security, there are situations where you may need to evaluate the present value of those payments — for example, when considering a buyout offer from a settlement purchasing company. This structured settlement calculator uses the time value of money formula to show you exactly what your future payments are worth in today's dollars, so you can make an informed comparison.
Step 1: Enter Your Payment Details
Start by entering the dollar amount you receive per payment period. Then select the payment frequency — monthly, quarterly, or annually — to match your settlement schedule. Next, enter the total number of remaining payments. For example, if you receive $2,000 monthly for the next 10 years, that would be 120 remaining payments at a monthly frequency.
Step 2: Set the Growth Rate
If your structured settlement payments increase over time (a cost-of-living adjustment or built-in escalator), enter the annual growth rate. Most structured settlements have level payments, so leave this at 0%. If your payments increase by 2% or 3% per year, enter that percentage here. The calculator will apply the growth to each period individually.
Step 3: Choose a Discount Rate
The discount rate is the most important variable in the calculation. It represents the rate of return used to discount future payments back to their present value. Settlement purchasing companies typically use rates between 9% and 15%. Use the slider or preset buttons to explore different rates. A lower discount rate produces a higher present value — meaning you would keep more of your money. Use the comparison table to see present values side by side at 7%, 9%, 12%, and 15%.
Step 4: Review Your Results
After clicking Calculate, the summary cards show three key figures: the present value (what the payments are worth today), the total undiscounted payments (the simple sum of all future payments), and the discount amount (how much value is lost to discounting). The "cents on the dollar" metric tells you what fraction of each payment dollar you would actually receive in a lump sum buyout. The detailed payment schedule shows the present value of each individual payment and a running total, so you can see exactly how each payment contributes to the overall value.
Understanding the Time Value of Money
The core principle behind this calculator is that money available today is worth more than the same amount in the future. This is because today's money can be invested and earn returns. The discount rate quantifies this difference. A $5,000 payment due in 5 years at a 9% discount rate is worth approximately $3,250 today. The further into the future a payment falls, the less it is worth in present-value terms. This calculator applies the standard present value annuity formula: PV = PMT x [(1 - (1 + r)-n) / r] for level payments, and discounts each period individually when payments grow over time.
FAQ
Is this structured settlement calculator free?
Yes, this calculator is completely free with no signup, no account, and no hidden costs. All calculations run locally in your browser using JavaScript. Your financial details are never stored or transmitted anywhere.
Is my financial data private and secure?
Absolutely. All calculations happen entirely in your browser. No payment amounts, settlement details, or personal information is ever sent to any server. You can use this tool completely offline after the page loads.
What discount rate do structured settlement buyers typically use?
Structured settlement purchasing companies like JG Wentworth and Peachtree typically use discount rates between 9% and 15%. This means you would receive roughly 40-70 cents on the dollar compared to the total remaining payments. Lower discount rates are more favorable to the seller.
What is present value and why does it matter?
Present value is what a series of future payments is worth today, accounting for the time value of money. A dollar today is worth more than a dollar next year because you could invest it. Present value helps you compare a lump sum offer against keeping your periodic payments.
Should I sell my structured settlement?
This is a complex financial decision that depends on your individual circumstances. Selling usually means receiving significantly less than the total remaining payments. Consider consulting a financial advisor and attorney before making this decision. Courts must approve most structured settlement transfers.
How is the present value formula calculated?
For level payments, the formula is PV = PMT x [(1 - (1 + r)^-n) / r], where PMT is the payment amount, r is the discount rate per period, and n is the number of remaining periods. For growing payments, each period is discounted individually to account for the growth rate.
What is a fair discount rate for selling a structured settlement?
A fair discount rate is generally considered to be between 7% and 9%. Rates above 12% are considered aggressive and significantly reduce what you receive. Always get multiple quotes and compare offers. The court reviewing your transfer will consider whether the rate is reasonable.