Glossary

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401(k): A type of employer provided retirement plan. Contributions to these plans are usually tax-deferredA feature of many retirement accounts where the income taxes on the earnings and sometimes on initial investments are delayed until withdrawals are taken from the account. and may be eligible for employer match. Synonyms: 401k, 401k Plan
403(b): A type of employer provided retirement plan for education or non-profit workers. Contributions to these plans are usually tax-deferredA feature of many retirement accounts where the income taxes on the earnings and sometimes on initial investments are delayed until withdrawals are taken from the account.. Synonyms: 403b
457: A type of retirement plan for state and local government employees. In these accounts, you set your contribution levels within the rules and limits of your plan. Contributions to these plans are usually tax-deferredA feature of many retirement accounts where the income taxes on the earnings and sometimes on initial investments are delayed until withdrawals are taken from the account..
annuity: An investment product that provides tax-deferredA feature of many retirement accounts where the income taxes on the earnings and sometimes on initial investments are delayed until withdrawals are taken from the account. growth and the option to convert to a stream of incomeYour total taxable earnings. payments. Many annuitiesAn investment product that provides tax-deferred growth and the option to convert to a stream of income payments. Many annuities offer special features at additional fees that may be of interest to some investors. offer special features at additional fees that may be of interest to some investors. See also: fixed annuity, index annuity, variable annuity Synonyms: annuities
asset class: A group of securitiesAn investment that has financial value, such as stocks and bonds. with similar characteristics. The three main asset classes are equities (i.e. stocksOwnership in a part of a company where your investment sees gains or losses based on that company's performance.), fixed-incomeYour total taxable earnings. (i.e. fixed annuitiesAn insurance contract that guarantees a particular rate of return for a declared period of time. Generally, rates can reset throughout the length of the contract. Guarantees are backed by the claims-paying ability of the issuing insurance company. or bondsA loan to a company or the government for a certain period of time in exchange for interest payments.) and cash equivalents (i.e. money marketBank account that typically offers a higher interest rate in exchange for maintaining a larger minimum balance. Typically FDIC Insured if account meets required limits. accounts).
assets: Generally any property or object of value. For this website, we consider any property earmarked as investments intended to fund your retirement. Synonyms: asset
bank money market account: Bank account that typically offers a higher interest rate in exchange for maintaining a larger minimum balance. Typically FDIC Insured if account meets required limits. Synonyms: bank money market accounts, money market
beneficiary: The designated person or persons who will inherit the benefits on your investment in the event of your passing. Synonyms: beneficiaries
bond fund: A mutual fundA professionally managed pool of investments that allows you access to multiple investments inside of a single solution. Each shareholder participates in the gain or loss of the fund. Shares are issued and can be redeemed as needed. that invests primarily in bondsA loan to a company or the government for a certain period of time in exchange for interest payments.. Synonyms: bond funds
bonds: A loan to a company or the government for a certain period of time in exchange for interest payments.
brokerage accounts: Investment accounts that allow you to invest in stocksOwnership in a part of a company where your investment sees gains or losses based on that company's performance., bondsA loan to a company or the government for a certain period of time in exchange for interest payments., mutual funds, and more inside of one solution.
certificates of deposit or CD: Savings option offered by banks that guarantees a specific interest rate in exchange for not withdrawing your money for a certain period of time. Synonyms: CD, certificates of deposit
compounding: The concept of generating earnings on top of earnings which can increase your growth over time.
consolidation: Reducing the number of retirement accounts you are managing by combining your accounts.
death benefit: Payment made to the person or people you designate in the event of your passing. Synonyms: death benefits
debt: Money owed, such as credit cards and mortgages.
diversification: Investment strategy that entails spreading your investments among different investment classes or different investment products in order to lessen your overall portfolio risk.
equity: A stock or any security representing an ownership in a company.
equity fund: A mutual fundA professionally managed pool of investments that allows you access to multiple investments inside of a single solution. Each shareholder participates in the gain or loss of the fund. Shares are issued and can be redeemed as needed. that invests primarily in stocksOwnership in a part of a company where your investment sees gains or losses based on that company's performance..
fixed annuity: An insurance contract that guarantees a particular rate of return for a declared period of time. Generally, rates can reset throughout the length of the contract. Guarantees are backed by the claims-paying ability of the issuing insurance company. See also: annuity Synonyms: fixed annuities
income: Your total taxable earnings.
index annuity: An insurance contract that allows you to participate in a portion of stock market gains while staying protected from stock market losses. Methods by which interest is credited to an account may be complex and index annuitiesAn insurance contract that allows you to participate in a portion of stock market gains while staying protected from stock market losses. Methods by which interest is credited to an account may be complex and index annuities may not be suitable for all investors. Guarantees are backed by the claims-paying ability of the issuing insurance company. may not be suitable for all investors. Guarantees are backed by the claims-paying ability of the issuing insurance company. See also: annuity Synonyms: (IA), IA, index annuities, Index Annuities
inflation risk: The likelihood of decreases in the purchasing power of your dollar over time.
IRA: Individual Retirement Accounts (or IRAs) are set up and owned directly by you. Tax benefits, contribution limits, and distribution rules vary by age and type of IRA. These include both Traditional (where taxes are deferred until the money is withdrawn) and Roth (where taxes are taken out up front). Synonyms: (IRA), Individual Retirement Account, Individual Retirement Accounts
last will and testament: A legal document that defines how your assets will be distributed once you pass on.
life insurance: A contract between you and an insurance company where in exchange for predetermined premiums the insurer pays an amount of money to a person or people of your choosing once you pass on.
living will: A legal document that states your medical wishes if you are no longer capable of making decisions for yourself.
long term care insurance: Provides coverage for your needs if you become infirmed and need additional assistance — can include in-home care, assisted living or nursing homes.
longevity risk: The risk of outliving your savings.
market index: A group of stocksOwnership in a part of a company where your investment sees gains or losses based on that company's performance. or bondsA loan to a company or the government for a certain period of time in exchange for interest payments. whose performance is tracked together. For example, a well-known market indexA group of stocks or bonds whose performance is tracked together. For example, a well-known market index is the S&P 500 which consists of stocks from the 500 largest companies. is the S&P 500 which consists of stocks from the 500 largest companies.
mutual funds: A professionally managed pool of investments that allows you access to multiple investments inside of a single solution. Each shareholder participates in the gain or loss of the fund. Shares are issued and can be redeemed as needed. Synonyms: mutual fund
non-qualified: Savings and investments that do not qualify for any tax breaks. Typically, they include investments or savings made with "after-tax" money.
pension: An employer sponsored retirement plan where an employer will pay a retired employee a stream of incomeYour total taxable earnings. (or lump sum if the option is available). Payment amount is based on factors such as employment history and salary.
periodic withdrawals: Money taken out of your account on either a regular or irregular basis.
portfolio manager: One or more people who are responsible for selecting and managing the investments inside of a mutual fundA professionally managed pool of investments that allows you access to multiple investments inside of a single solution. Each shareholder participates in the gain or loss of the fund. Shares are issued and can be redeemed as needed. or other pooled investment.
power of attorney: A legal document that enables someone else to act on your behalf. Assigning a power of attorneyA legal document that enables someone else to act on your behalf. Assigning a power of attorney ensures that someone will look after your affairs if you become incapacitated. ensures that someone will look after your affairs if you become incapacitated.
rebalancing: Realignment of your portfolio on a regular basis to better align with your investment strategy and risk toleranceA measure of your willingness to accept greater risk in exchange for potential greater returns..
retirement income: Money you need each month to cover your essential expenses.
riders: Additional features of an insurance contract that offer additional benefits for an added cost. Synonyms: rider
risk tolerance: A measure of your willingness to accept greater risk in exchange for potential greater returns.
rollover: The process of moving money from one retirement account to another.
savings account: Deposit account held at a bank that provides principal protection and a modest interest rate. Synonyms: savings accounts
savings rate: The percentage of your paycheck diverted directly into your retirement savings.
securities: An investment that has financial value, such as stocksOwnership in a part of a company where your investment sees gains or losses based on that company's performance. and bondsA loan to a company or the government for a certain period of time in exchange for interest payments..
Social Security: The federal benefits paid to workers during retirement if they have paid into the system during their working years.
stocks: Ownership in a part of a company where your investment sees gains or losses based on that company's performance.
surrender charges: Fees charged by an investment product for withdrawing your money early.
systematic withdrawal plan: A service that provides a specific payout to you on a regular basis.
tax-deferred: A feature of many retirement accounts where the incomeYour total taxable earnings. taxes on the earnings and sometimes on initial investments are delayed until withdrawals are taken from the account.
variable annuity: An insurance contract that allows you to invest in variable sub-accounts for tax-deferredA feature of many retirement accounts where the income taxes on the earnings and sometimes on initial investments are delayed until withdrawals are taken from the account. growth. The performance of the overall annuity is based on the performance of the sub-accounts you are invested in. Generally, the investor assumes the risks associated with investing in the sub accounts. Most variable annuitiesAn investment product that provides tax-deferred growth and the option to convert to a stream of income payments. Many annuities offer special features at additional fees that may be of interest to some investors. also allow for future incomeYour total taxable earnings. payments (a deferred variable annuityAn insurance contract that allows you to invest in variable sub-accounts for tax-deferred growth. The performance of the overall annuity is based on the performance of the sub-accounts you are invested in. Generally, the investor assumes the risks associated with investing in the sub accounts. Most variable annuities also allow for future income payments (a deferred variable annuity) or immediate income payments (an immediate variable annuity).) or immediate income payments (an immediate variable annuity). See also: annuity
vesting: The time period over which the employer match in your retirement account becomes fully yours.