On this milestone 300th episode of the Retire with Ryan podcast, I dig into whether the Social Security lump sum payment option is right for you. After a client reached out with questions about whether accepting a lump sum is a good deal, I want to break down how the option works, who it's available to, and the key factors to consider when making this important decision. If you're approaching retirement, this episode offers practical guidance on weighing the lump sum versus higher monthly benefits, health considerations, and the impact on survivor benefits and taxes.

• [00:00] Getting started with Social Security

• [05:22] monthly Social Security benefit calculations

• [06:11] Reasons to take the lump sum

• [07:48] Health concerns and social security benefits

• [08:27] When passing on the lump sum is a better choice

• [10:24] Your lump sum may increase your taxable income

When you apply for Social Security after your full retirement age (FRA), the Social Security Administration may offer a lump sum payment. This option is generally given to individuals who delay collecting benefits past their FRA. The lump sum typically covers up to six months of retroactive benefits.

For example, if your FRA is 66 and you apply a year later, you might be eligible for a lump sum equal to six months of prior payments. However, there's a catch: your monthly benefit will be calculated as if you started receiving Social Security six months earlier, resulting in a lower monthly payment going forward.

Let's look at the numbers. Suppose your current monthly Social Security benefit is $2,500. If you elect the lump sum, your payment will be based on your benefit from six months ago—roughly 4% lower, or about $2,350 per month. You would receive a lump sum ($2,350 x 6 = $14,100), but your ongoing monthly benefit would start at the lower amount. Dividing the lump sum ($14,100) by the monthly difference ($150) gives about 94 months, or almost eight years. In other words, it will take eight years of receiving the higher benefit to make up for not taking the lump sum.

There are situations where the lump sum makes sense:

1. Immediate Financial Need:

If you have bills, a major expense, or want to fund something important like a vacation, accessing the lump sum offers flexibility.

2. Health Concerns:

If your health is poor, the lump sum may be preferable. Social Security benefits cease at death, except for a $255 survivor payment. Taking the lump sum ensures you receive more of your entitled benefits within your lifetime.

For many, passing on the lump sum will be the wiser move, if you're healthy and likely to live at least eight years, your higher monthly benefit will surpass the lump sum. Something else to consider is if you're the higher-earning spouse, your survivor's benefits will be based on your monthly payment. Opting for a lower benefit reduces what your spouse would receive after your passing.

Future cost-of-living increases are based on your initial benefit. Starting at a lower monthly payment means smaller dollar increases over time. Historically, Cost of Living Adjustments (COLA) average 2.8% per year; these can add up and compound. You also need to remember that receiving a lump sum may increase your taxable income for that year, possibly pushing you into a higher bracket or increasing taxes on your Social Security benefits. Ultimately, the decision is highly personal. Assess your health, financial needs, family longevity, and whether your spouse would depend on your benefit. Crunching the numbers will clarify your breakeven point.

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On the show this week, I'm talking all about the topic of probate and how adding a Transfer on Death (TOD) or Payable on Death (POD) beneficiary designation to certain assets can help you avoid your estate being tied up in the probate process.

You'll learn which types of accounts allow for TOD or POD beneficiaries, why these designations might be preferable to joint tenancy, and the pros and cons of setting them up. I break down step-ups in cost basis, the impact on estate taxes, and touch on differences across states—plus considerations to make sure your estate plan actually fits your wishes.

• 00:00 Understanding Transfer on Death designations

• 03:05 Joint tenants with rights of survivorship

• 04:37 Pros and cons of TOD and POD accounts

• 09:03 Challenges of TOD in estate planning

• 11:24 Process for establishing TOD beneficiaries

• 13:00 Does TOD avoid probate?

A Transfer on Death designation allows you to name one or more beneficiaries who will automatically receive ownership of your accounts or property when you pass away. Unlike retirement accounts and life insurance policies—which typically require you to name beneficiaries—many investment and bank accounts, such as mutual funds, brokerage accounts, and money markets, do not automatically offer this option. That's where TOD comes into play, bridging a critical gap in your estate planning.

One of the main benefits of a Transfer on Death (TOD) is that it allows designated beneficiaries to inherit assets quickly and directly, often by providing just a death certificate and minimal paperwork, which means they can avoid prolonged probate proceedings. This quick turnaround not only spares beneficiaries the stress and uncertainty of waiting for a court-supervised process but also helps them sidestep probate fees and other complications. Beneficiaries can benefit from a full step-up in cost basis on inherited assets, potentially reducing capital gains taxes if they sell soon after inheriting. For individuals who want to ensure their loved ones receive specific assets efficiently—and without granting them any access or control during their lifetime—a TOD can be an appealing tool.

However, while TOD accounts streamline asset transfer, they can introduce challenges if not coordinated carefully with a broader estate plan. For example, if you wish to provide ongoing financial support rather than a lump sum, a TOD may not be suitable because the beneficiary immediately gains control of the assets. This could present issues for beneficiaries who are not financially responsible or who qualify for government aid. Additionally, TOD designations override instructions in a will, which means any inconsistencies in how beneficiaries are named or assets are divided, could cause confusion or disputes. TOD accounts are convenient, but they require thoughtful coordination with other estate planning elements to avoid unintended consequences.

While TOD almost always avoids the probate process for the specific asset, state laws can vary. Some less populous or smaller estates may not need to open probate regardless, but others require probate for everyone, as it's a revenue-generating process.

TOD and POD beneficiary designations offer an easy, low-cost way to keep more of your assets in your family's control, minimize delays, and potentially avoid the hassle of probate. Thoughtful planning addresses not just asset transfer, but also your heirs' needs and the tax implications. As with any estate tool, consider your specific circumstances and consult with a professional before making changes.

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Tax season is here, and if you're just now gathering your documents to file your return—or preparing them for your CPA—this is the time to slow down and make sure you're not making costly mistakes. In this episode, I walk through seven tax mistakes I frequently see both tax preparers and self-filers make when filing their returns. Some of these errors seem simple on the surface, but they can lead to penalties, missed deductions, delayed refunds, or paying more taxes than necessary. My goal in this episode is to help you avoid these pitfalls so you can file confidently and keep more of your money where it belongs.

• [00:00] Why tax season mistakes are more common than you might think

• [01:00] The costly consequences of filing after the tax deadline

• [02:30] Why double-checking basic personal information matters more than you think

• [03:30] The hidden risk of missing 1099 forms in the digital age

• [04:15] How a rollover mistake can accidentally create taxable income

• [05:00] The surprisingly common issue of unsigned tax returns

• [05:30] Why simple math errors can lead to penalties or unexpected refunds

• [06:30] When free tax preparation help may—or may not—be a good option

Many tax mistakes don't happen because people are careless. They happen because people rush, assume something was already handled, or simply overlook a small detail that turns into a big issue later. One of the most common problems I see is filing past the tax deadline. Each year millions of taxpayers fail to file by the April deadline, which can trigger penalties and interest if taxes are owed. Even if you're due a refund, filing late can delay getting your money back.

Another major issue is incomplete or incorrect information on the return. Something as simple as entering the wrong bank account for a direct deposit or forgetting to include a tax document can delay processing or create unnecessary headaches. And in today's digital world, many tax forms are delivered electronically, which means it's easier than ever to overlook a 1099 if you forget about an account.

Beyond basic filing errors, many taxpayers lose money by missing deductions or not understanding new tax rules. Starting with the 2025 tax return, several changes introduced under the "One Big Beautiful Bill Act" create additional tax breaks. These include adjustments to the standard deduction, expanded deductions for certain taxpayers, and other potential opportunities many filers may not even realize exist.

I also discuss why deciding between the standard deduction and itemizing can significantly affect how much tax you owe. In recent years, higher standard deductions meant fewer people itemized their taxes. But changes to the state and local tax deduction cap may reopen the door for some taxpayers to itemize again, especially homeowners with mortgages or individuals paying higher state and local taxes.

Understanding what qualifies as an itemized deduction—from mortgage interest to medical expenses and charitable contributions—can make a meaningful difference in your tax outcome.

Two other mistakes I see regularly involve retirement and tax planning details that often get overlooked. Some taxpayers make IRA or Health Savings Account contributions but forget to report them properly on their return. That mistake can cause them to miss legitimate deductions that could reduce their taxable income.

Another issue is failing to pay quarterly estimated taxes. This commonly affects self-employed individuals, business owners, and retirees who receive income without automatic tax withholding. Without proper withholding or estimated payments, taxpayers may face penalties—even if they eventually pay the full amount owed.

The good news is that many tax mistakes can be corrected. If you discover an issue after filing, an amended return can often resolve the problem. But catching these issues before filing is always the best strategy.

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