A Lump Sum is a single, large payment of money received all at once, rather than in smaller installments over time. In retirement planning, this often refers to taking your entire retirement account balance as one big withdrawal instead of spreading it out through regular monthly payments. For example, when you retire, you might choose between receiving a lump sum of your entire 401k balance or taking monthly pension payments. While lump sums provide immediate access to all your money, they also come with significant tax implications since the entire amount may be taxed in one year, potentially pushing you into higher tax brackets.