Introduction
This structured settlement calculator estimates the present value of a future payment stream. Present value (PV) is a way to translate money you will receive later into an equivalent amount in today’s dollars by applying a discount rate. In plain terms: a dollar received in the future is usually worth less than a dollar received today, because money has an opportunity cost and because future payments carry timing and uncertainty considerations.
The calculator is designed for common structured settlement and annuity schedules, including monthly, quarterly, yearly, and one-time payments. You can enter multiple payment series to match the way many settlement contracts are written (for example, one series for a monthly benefit and another series for a later balloon payment). After you click calculate, you will see:
- Total Future Payments: the simple sum of all payments without discounting.
- Present Value: the discounted value of those payments using your chosen rate.
- Implied Discount Rate (optional): if you enter a cash offer, the calculator estimates the rate that makes the PV match the offer.
- Payment breakdown table: each payment’s timing (in years), amount, and present value.
- Chart: cumulative totals over time for both future payments and present value.
This tool is for education and planning only. It does not provide legal, tax, or financial advice and does not model court approval, assignment restrictions, taxes, attorney fees, broker fees, or other transaction costs.
How to use
- Add your payment series under “Payment schedule.” Use one series for each distinct pattern in your paperwork: payment amount, frequency, number of payments, and when the series starts.
- Choose a discount rate (annual). If you are unsure, run multiple scenarios (for example, 4%, 8%, 12%) to see how sensitive the present value is to the rate.
- Optional: enter a cash offer to estimate the offer’s implied discount rate. This can help you compare offers on a consistent basis.
- Click “Calculate Present Value” to generate the summary, the payment table, and the chart.
- Use “Copy Result” to copy the summary text for an email, notes, or a spreadsheet.
Formula (what the calculator is doing)
Each payment is discounted back to today using the standard present value relationship:
Formula: PV = FV / (1+r)^n
- FV is the future payment amount (the check you receive later).
- r is the annual discount rate (as a decimal; for example, 8% becomes 0.08).
- n is the time in years from today to the payment. This calculator converts “Start After (Months)” into years and then adds the interval for each payment based on the selected frequency.
For a series of payments, the calculator applies the formula to each payment and sums the present values. If you enter a cash offer, the calculator estimates an implied discount rate by searching for the rate that makes the present value of the schedule approximately equal to the offer. This is useful because offers are often easier to compare as an implied rate than as a raw dollar amount.
Worked example (step-by-step)
Suppose your schedule is $10,000 yearly for 10 payments, starting 12 months from now. You want to value it at a 5% annual discount rate. You also received a $70,000 cash offer and want to understand what that offer implies.
Enter one payment series with these values:
- Payment Amount ($): 10000
- Frequency: Yearly
- # of Payments: 10
- Start After (Months): 12
- Discount Rate (%): 5
- Cash Offer ($, optional): 70000
The first payment is 1 year away, the second is 2 years away, and so on. The calculator discounts each $10,000 payment back to today and totals the present values. It then compares the total PV to the $70,000 offer and estimates the offer’s implied discount rate. If the implied rate is much higher than the rate you consider reasonable, that can indicate the offer is relatively low for the schedule (all else equal). If it is lower, the offer may be comparatively strong.
Limitations and assumptions
- Fixed amounts within each series: each series is treated as level payments (no step-ups inside a single series).
- Regular timing: monthly/quarterly/yearly spacing is modeled evenly; exact calendar dates, weekends, and processing delays are not modeled.
- Constant discount rate: the rate is assumed constant over the full schedule.
- No taxes or transaction costs: taxes, legal fees, court costs, and buyer fees are not included.
- No credit/default risk: the calculation assumes payments are made as scheduled.
- Estimates only: real offers can differ due to underwriting, market conditions, and legal requirements.
If you are considering selling payments, consider reviewing your situation with a qualified attorney and/or licensed financial professional.
How to interpret the results
The output includes both a total future amount and a present value. The difference between them is not a “fee” charged by the calculator; it is the mathematical effect of discounting. A higher discount rate reduces present value because it assumes a higher opportunity cost for waiting. A lower discount rate increases present value because it assumes waiting is less costly.
When comparing a cash offer, focus on the implied discount rate and the assumptions behind it. Two offers can look similar in dollars but imply very different rates depending on the timing of the payments you are selling. If your schedule has large payments far in the future, the implied rate can be especially sensitive.
Input tips (to match real settlement paperwork)
Settlement documents often describe payments in blocks. This calculator works best when you mirror that structure. If your payments change over time, add multiple series. For example, a schedule might say “$1,000 per month for 36 months, then $1,500 per month for 60 months.” In the calculator you would enter two series: one starting at 0 months for 36 payments, and a second starting at 36 months for 60 payments.
If you have a one-time lump sum (sometimes called a balloon payment), choose “One-Time” frequency and set “# of Payments” to 1. Then set “Start After (Months)” to the number of months until that lump sum is due.
If you are unsure about the discount rate, consider running a range. For educational purposes, you might test a conservative rate (such as 3%–5%), a moderate rate (such as 6%–9%), and a higher rate (10%+). The right rate depends on context, including market conditions and the terms of any offer.
Practical guidance (choosing inputs)
The discount rate is the biggest driver of the result. A lower rate produces a higher present value; a higher rate produces a lower present value. If you are comparing a buyer’s offer, it can be helpful to run a few rates to see a range of values rather than relying on a single assumption.
If your settlement changes over time (for example, step-ups), model it as multiple series. For example: “$1,000 monthly for 36 payments starting in 0 months” plus “$1,500 monthly for 60 payments starting in 36 months.” Add a one-time series for any balloon payment.
Remember that this page estimates value in nominal dollars and does not include taxes, fees, or legal requirements. Those items can materially change what you keep.
Common questions (plain-language)
What discount rate should I use?
There is no single “correct” discount rate for every situation. In finance, the discount rate reflects the time value of money and the return you might require to wait for future cash flows. In the context of structured settlements, offers from buyers may imply higher rates than conservative investment assumptions because the buyer is pricing in administrative costs, profit, and other factors. The best approach for planning is to test multiple rates and see how the present value changes.
Why does the implied discount rate matter?
The implied discount rate converts a cash offer into a comparable annual rate. This helps you evaluate offers across different schedules. For example, a $50,000 offer might be attractive for a short schedule but unattractive for a long schedule. The implied rate provides a consistent lens: higher implied rates generally mean a lower offer relative to the payment stream (assuming the same schedule).
Does the calculator use exact dates?
No. Timing is modeled in years using “Start After (Months)” and the chosen frequency. This is usually sufficient for estimation and comparison, but it will not match a contract that specifies exact payment dates, day-count conventions, or irregular intervals. If you need a contract-accurate valuation, you may need a specialized tool or professional analysis.
What if my payments are guaranteed vs. life-contingent?
This calculator treats the schedule as if each listed payment will occur. Some annuities or settlement benefits can be contingent on life events. Valuing life-contingent payments typically requires actuarial assumptions (life expectancy, mortality tables, and contract terms). If your schedule is contingent, use this calculator only as a rough reference and consider professional guidance.
Privacy and data
Your inputs are processed in your browser when you click calculate. This page does not ask for names, addresses, claim numbers, or other identifying information. If you are working with sensitive settlement details, consider using rounded numbers or a simplified schedule for initial comparisons.
Glossary
- Present value (PV)
- The value today of a future payment, after discounting for time.
- Future value (FV)
- The amount of a payment you will receive in the future (not discounted).
- Discount rate
- The annual rate used to translate future dollars into today’s dollars.
- Implied discount rate
- The rate that makes the present value of the schedule approximately equal to a given cash offer.
- Payment series
- A block of payments with the same amount, frequency, start time, and count.