Retirement
Building income for later — and getting the tax break now.
Retirement accounts come with tax advantages and rules worth understanding. These terms cover the accounts, benefits, and strategies that turn today's savings into income you can't outlive.
All Retirement terms(58)
- 4% RuleA guideline suggesting you can withdraw four percent of your savings the first year of retirement, adjusting for inflation after.
- 401(k)A retirement account through your job, often with an employer match — free money for saving.
- 401(k) LoanBorrowing from your own workplace retirement savings and paying yourself back with interest over time.
- 403(b) PlanA retirement savings plan offered to teachers, nonprofit workers, and public employees, similar to a 401k in the private sector.
- 457 PlanA retirement plan for state and local government workers that allows penalty-free withdrawals once you leave your job.
- 72(t) DistributionA way to take penalty-free early withdrawals from a retirement account through a series of equal, scheduled payments.
- AnnuitizationConverting a lump sum, often from an annuity, into a stream of regular income payments that can last for life.
- AnnuityA contract with an insurance company that converts a sum of money into a stream of steady payments over time.
- Backdoor RothA method high earners use to fund a Roth IRA by contributing to a traditional IRA first, then converting it.
- Beneficiary DesignationThe named person who inherits your retirement account, which overrides your will for that account when you pass away.
- Catch-Up ContributionAn extra amount people age fifty and older can add to retirement accounts beyond the standard yearly limit.
- Cliff VestingA vesting rule where you own none of the employer contributions until a set date, then become fully vested all at once.
- Contribution LimitThe maximum amount the government lets you put into a retirement account in a single year.
- Cost-of-Living Adjustment (COLA)A yearly increase to benefits like Social Security or pensions that helps your income keep pace with inflation.
- Deferred AnnuityAn annuity that grows for years before payments begin, letting your money build up before you start drawing income.
- Deferred CompensationAn arrangement where you set aside part of your pay to receive later, often in retirement, to postpone taxes on it.
- Defined Benefit PlanAn employer plan that promises a specific retirement payout, with the company bearing the responsibility for funding it.
- Defined Contribution PlanA retirement plan like a 401k where you and your employer contribute, and your payout depends on investment performance.
- Delayed Retirement CreditsExtra amounts added to your Social Security benefit for each month you wait to claim past your full retirement age.
- Direct RolloverA transfer where retirement funds move straight between providers so you never touch the money and avoid withholding.
- Early RetirementLeaving the workforce before the traditional retirement age, which requires enough savings to bridge years without a paycheck.
- Employer MatchMoney your company adds to your retirement account based on how much you contribute, effectively free money toward your savings.
- Excess ContributionMoney added to a retirement account above the yearly limit, which can trigger a penalty until you remove it.
- Full Retirement AgeThe age at which you can collect your complete Social Security benefit without any reduction for claiming early.
- Graded VestingA vesting rule where you gradually earn ownership of employer contributions in steps over several years of service.
- Hardship WithdrawalTaking money from a retirement plan early to cover an urgent financial need, often still subject to taxes and penalties.
- Immediate AnnuityAn annuity that begins paying you income right after you hand over a lump sum, often used at the start of retirement.
- In-Service RolloverMoving money out of your workplace plan into an IRA while you still work there, if the plan permits it.
- Inflation RiskThe chance that rising prices erode your buying power over time, making fixed retirement income stretch less each year.
- Inherited IRAA retirement account you receive from someone who died, carrying its own withdrawal rules and timelines for heirs.
- Longevity RiskThe chance that you outlive your retirement savings because you live longer than your money was planned to last.
- Lump-Sum DistributionTaking your entire retirement benefit as one large payment instead of receiving it as monthly income over time.
- MedicareThe federal health insurance program for people age sixty-five and older, covering hospital and medical costs in retirement.
- Medicare Part BThe part of Medicare that covers doctor visits and outpatient care, with a monthly premium usually deducted from Social Security.
- Nest EggThe total pool of money and investments you build up to fund your living expenses throughout retirement.
- PensionA retirement plan where your employer promises a set monthly payment for life, usually based on your salary and years worked.
- Qualified Charitable DistributionA transfer of money directly from your IRA to a charity that can satisfy your required withdrawal without added tax.
- Required Minimum Distribution (RMD)The minimum amount you are required to withdraw from certain retirement accounts each year once you reach a set age.
- Retirement AgeThe age at which you choose to stop working, which affects your savings, Social Security timing, and Medicare eligibility.
- Retirement IncomeThe money you live on after you stop working, drawn from savings, Social Security, pensions, and other sources.
- RolloverMoving money from one retirement account to another, such as a 401k into an IRA, without triggering taxes.
- Roth 401(k)A workplace retirement account where you contribute after-tax money so qualified withdrawals in retirement come out tax-free.
- Roth ConversionMoving money from a pre-tax retirement account into a Roth account and paying the taxes now for tax-free growth later.
- Roth IRAA retirement account funded with after-tax money that grows and comes out tax-free.
- Safe Withdrawal RateThe percentage of your savings you can spend each year with low risk of running out of money during retirement.
- SEP-IRAA retirement plan for self-employed people and small business owners that allows larger contributions than a standard IRA.
- Sequence-of-Returns RiskThe danger that poor investment returns early in retirement drain your savings faster than the same losses would later.
- SIMPLE IRAA retirement plan for small businesses that lets both employees and the employer contribute with less paperwork than a 401k.
- Social SecurityA federal program that pays monthly income to retirees, funded by payroll taxes collected during your working years.
- Social Security CreditsUnits you earn by working and paying payroll taxes, and you generally need forty of them to qualify for benefits.
- Solo 401(k)A 401(k) plan built for self-employed individuals with no employees, letting you contribute as both worker and employer.
- Spousal BenefitA Social Security payment based on your spouse's earnings record, which can be larger than a benefit based on your own.
- Survivor BenefitA Social Security payment a widow, widower, or dependent can receive based on a deceased worker's earnings record.
- Target-Date FundAn all-in-one investment that automatically shifts to safer holdings as you approach a chosen retirement year.
- Tax-Deferred GrowthInvestment gains that build up untaxed inside a retirement account until you withdraw the money later.
- Traditional IRAA retirement account where you often deduct contributions now and pay taxes later when you withdraw the money.
- VestingThe process of earning full ownership of employer-contributed retirement money, often requiring you to stay for a set number of years.
- Vesting ScheduleThe timeline that determines how much of your employer's contributions you keep depending on how long you have worked there.