Jill on Money with Jill Schlesinger

Episode: Lump Sum or Monthly Payments?

Date: September 1, 2025
Host: Jill Schlesinger, CFP®
Co-Host/Producer: Mark (Financial Planner)
Caller: Ron (Midwest)

Episode Overview

In this episode, Jill and Mark help a listener, Ron, navigate a key retirement decision: should his wife take a lump sum pension payout or opt for structured monthly payments with survivor benefits? The discussion unpacks the family’s finances, lifestyle needs, and various tradeoffs, delivering concrete, jargon-free advice for anyone facing a similar crossroad in their financial planning. The tone is supportive, practical, and refreshingly direct, with both hosts emphasizing actionable steps and personalized analysis.

Key Discussion Points & Insights

1. Ron’s Financial Situation

Timestamps: [02:09]–[03:13]

• Ages & Income:
  • Ron is 58, his wife is 59.
  • Ron earns $125,000/year in his current job and receives a $50,000/year pension from a previous employer.
  • His wife receives $6,500/month from long-term disability.
• Retirement Savings:
  • $260,000 in Roth IRAs.
  • $2.2 million in traditional IRAs/401(k)s.
• Monthly Expenses:
  • "Probably about $11,000." (Ron, [02:57])
• Disability Update:
  • Wife does not currently need in-home care.

2. Pension Options Under Consideration

Timestamps: [03:38]–[04:38]

• Option 1: Lump sum payout of $440,000.
• Option 2: Continue $6,500/month disability payments until age 65, then a pension of $2,400/month, with a $1,500/month survivor benefit if Ron’s wife predeceases him.
• Survivorship:
  • The $6,500 payments would end upon wife's death, but a $1,500/month survivor benefit would start at age 65.

3. Retirement Timeline & Social Security

Timestamps: [04:43]–[04:57]

• Ron plans to retire around age 60.
• His projected Social Security:
  • $2,900/month at full retirement age.
  • $3,600/month at age 70.

4. Jill and Mark’s Advice Process

Timestamps: [04:57]–[08:27]

• Mark notes he is “leaning lump sum” in this scenario, contrary to his usual approach, because of the family's already strong pension and retirement accounts.
  • Quote: "I'm leaning, I'm really leaning lump sum." (Mark, [05:24])
  • Reasoning: If Ron's wife passes before 65, the lump sum retains value and allows more flexibility, considering Ron’s own pension, projected Social Security, and significant savings.
• Mark emphasizes the couple's strong position to self-manage withdrawals from their retirement funds, continuing their ongoing Roth conversions and utilizing traditional IRA funds when needed.
  • Quote: "Wow, I've got a couple million bucks here. That's going to go a long way to get... You really may not [need to claim Social Security until 70]." (Mark, [06:41])
• The psychological side: The importance of not hesitating to draw down retirement savings as needed in retirement.
  • Quote: "Don't do that weird thing that happens when people retire, which is, ‘Oh, I don't want to pull money out of my retirement account.’ Well, you have to...we want you to do that." (Mark, [07:05])

5. Other Financial Considerations

Timestamps: [07:52]–[08:23]

• Home:
  • Valued at $550,000, with $122,000 left on a mortgage at 2.875%.
  • Mark advises against prepaying this low-rate mortgage.
• Children:
  • “Launched” (i.e., financially independent).
• Estate Planning:
  • Estate documents are up-to-date—a relief for the hosts.

6. Open-Ended Invitation for Further Insight

Timestamps: [08:27]–[08:44]

• Mark requests that Ron update them with his advisor’s opinion, highlighting the show's commitment to learning and openness to alternative perspectives.
  • Quote: "If they say, ‘Oh, no, no, you should definitely take the pension.’ I'd love to hear from them about that." (Mark, [08:40])

Notable Quotes & Memorable Moments

• On the couple’s savings discipline:
  • "Holy smokes, you guys have saved a ton of money." (Mark, [02:45])
• On why leaning lump sum is right here:
  • "If something were to happen to her, you'd have all of the money already." (Mark, [05:14])
• Reassuring the caller:
  • "You guys have done a tremendous job of saving, really. I think you're in good shape." (Mark, [07:32])
• On the importance of spending in retirement:
  • "We want you to do that. We want money to come out of that. You'll pay it at this...hopefully a decently low tax bracket." (Mark, [07:09])

Timestamps of Key Segments

• [02:09] – Ron introduces his family’s situation and financial snapshot
• [03:38] – Detailed breakdown of the two pension options
• [04:57] – Social Security projections and retirement income planning
• [05:24] – Mark’s reasoning behind favoring the lump sum option
• [07:52] – Housing, mortgage, and other assets discussed
• [08:19] – Estate planning check-in
• [08:27] – Invitation for feedback from the caller's financial advisor

Tone & Takeaways

• Tone: Reassuring, direct, and collaborative. Jill and Mark foster a nonjudgmental and problem-solving environment.
• Key Takeaways:
  • The best pension decision is highly personal, depending on total assets, income needs, and survivorship considerations.
  • Even strong savers may need permission to confidently draw down assets in retirement.
  • Maintaining financial flexibility—especially in uncertain health situations—often favors lump sum options when supported by other reliable income streams.
  • Always coordinate with trusted advisors and seek multiple perspectives, especially for big decisions.

Final Actionable Advice

• Consult with your financial advisor and be open to multiple viewpoints.
• Take an honest inventory of all assets and income for a full retirement needs analysis.
• Recognize the value of both guaranteed income and liquidity; the right balance depends on your unique circumstances.