Below you’ll find definitions on all things retirement related. And there are a lot of them! To help you find what you need, use the following alphabet to jump to the correct section.

Notice that some are red? That’s a good thing; it means there are no terms in that section that you need to know.





401K — A retirement savings plan that is handled by an employer. It lets employees invest parts of their paychecks towards retirement before taxes are taken out. See our Investor Glossary for more information on 401K and other types of investing (including retirement investing variations).

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AARP — The American Association of Retired People is a nonprofit organization with the goal of assisting retired and soon to retire people.

Absolute Beneficiary — A beneficiary who cannot be changed without the written consent of the current named beneficiary.

Accrued Interest — The amount of money created off of a bond or other fixed income method between the previous payment and when it is sold.

Allocated Benefits — A type of payment from a retirement plan that is guaranteed to the plan holder after the premiums are paid. Even if the company goes bankrupt, the funds will still be available to the plan holder.

Annuity — A contract from a company to give regular payments for the rest of the beneficiary’s life or for a set period of time.

Asset — A resource that has economic value.

Asset Allocation — Placing your assets among different categories.

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Balanced Funds — A common style of fund that diversifies a portfolio, usually made of 50 percent bonds and 50 percent stocks.

Beneficiary — A person who gains, receives payouts, or benefits from something. This can include a contract, will, or life insurance.

Blackout Dates — A period of time where participants can’t make changes to their investment selections.

Bonds — A bond is a secured debt where you are lending money to a business or other entity with the understanding you will be paid back plus interest after a set period of time. Typically, bonds are more stable, but generate less income, than stocks.

Bundled Plan — A 401K plan that has everything grouped together in a singular package.

Buy-and-Hold — A strategy where the stocks portion of a person’s portfolio is always fully invested in stocks.

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Cash or Deferred Program — see Salary Reduction Plan.

Catch Up Provision — A condition in some 401K plans that allow participants 50 years or older to make larger contributions to their fund.

Churning — Unethical and excessive trading to create extra commissions for the trader without producing real benefit to the client.

Common Stock — Investment demonstrating ownership interest in a company.

Compounding — When profit or interest is generated off of an investment which is then reinvested into another asset.

Current Ratio — A comparison between where different assets are located.

Current Yield — How much money you receive yearly minus the cost of security for it.

Custodian — Name for the bank or company that manages a person’s retirement accounts.

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Deferred Compensation — A plan for a portion of an employee’s paycheck to be put aside and paid later. Examples of deferred compensation are retirement plans, pensions, and purchasing company stocks.

Deflation — The drop of price for goods and services, gives a buyer more purchasing power.

Depreciation — A decrease in the value of an investment over time.

Designated Roth — Elective contributions to a retirement fund like a 401K that is held is a separate account.

Disability (Assistance) — Monetary assistance for people who have a disability that prevents them from making a living.

Discount Bond — A type of bond that is valued for less than its face value.

Dividend — Payment from a company to its investors and stockholders.

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Early Retirement — Having the ability to retire before the average age of 65.

Earnings Multiplier — A price to earnings ratio that is adjusted with current interest rates. This is used to determine the long term value for a stock.

Emergency Funds — Assets or funds that are easily accessible in case of an emergency. Usually in some sort of savings account.

Employee Retirement Income Security Act (ERISA) — Federal law that sets minimum standards for retirement or pension plans.

Expected Returns — The amount of profit or loss an investor can expect off of an investment.

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Fixed Income — A form of income from a source like a pension, retirement plan, or investment that doesn’t fluctuate from month to month or rise from inflation.

Forced Retirement/Mandatory Retirement — Some companies have a policy that employees have to retire after a certain number of years working or at a specific age.

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Going Public — When a privately owned company opens up their stocks to the public and becomes publicly owned.

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Holding Period — The time it takes for an investment to mature.

Holding Period Return — The total amount of money received from an investment after a set period of time.

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Income Fund — A trust or mutual fund that is focused on providing an income instead of growing the money.

Inflation — The loss of purchasing power thanks to an increase of prices in goods and services.

Inflation Risk — The risk that inflation overtime could ruin your investments.

Investment — When you place money with the purpose of gaining more money after a set period of time.

Investment Risk — The possibility that an investment won’t result in a profit or might result in a total loss.

IRA (Individual Retirement Account) — A tax-deferred account to which an individual may contribute up to $3,000 annually. Taxes are paid upon withdrawal from the account. Unlike a 401(k) account, an IRA does not require employer sponsorship to open. (See also: Roth IRA)

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Life Insurance — A contract between a person and an insurance company that, in exchange for regular payments, will provide a large lump sum of cash at the time of a person’s death.

Lifetime Immediate Annuity — A financial product that, by purchasing with a large amount of money, can ensure a fixed income for the rest of a person’s life.

Liquidate — The act of selling off assets in order to create cash in order to pay off expenses or debts.

Liquidity — How easy it is for a person to transform their assets into cash.

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Margin — Using borrowed money to secure assets.

Matching Contribution — When an employer or outside party agrees to supply money equal to what the main beneficiary puts towards an asset or retirement fund.

Maturity — How long a bond has until it is required to pay back the principle it borrowed.

Medicare — Federal health care insurance for people 65 years or older and people with disabilities.

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Pension — A retirement plan that is mostly funded by an employer.

Plan Sponsor — An entity, typically an employer, that is in charge of creating and maintain a retirement plan.

Plan Vendor — A company that sells and administers 401K plans, typically employed by the Plan sponsor.

Portfolio — A group of different investments, income sources, and assets.

Principle — The original amount of money that is invested or loaned out.

Probate — The process where a legal court goes through and handles all legal, financial, and will related issues after a person’s death.

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Qualified Plan — A private retirement fund that meets the rules established by the Internal Revenue Service.

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Retirement Home — An assisted living arrangement where elderly people who cannot take care of themselves are cared for by trained professionals.

Return — Money received from income plus capital gains.

Revenue Bond — A bond supported by the revenue from a specific project. This could include things like museums or toll bridges.

Reverse Mortgage — Where a person gives up the equity on their home in turn for regular payments.

Risk — The possibility that an investment will result in failure or loss of money.

Risk Tolerance — How much risk an investor is willing to make for an equal opportunity for higher success.

Rollover — The movement of funds from one retirement plan from another without taxes being imposed on them.

Roth IRA — A retirement fund that allows people to contribute after taxes funds, and then grows tax free.

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Salary Reduction Plan — A plan where funds are pulled directly from a salary before taxes are taken out of it and placed into a retirement fund.

Savings Plan — A defined plan for people to contribute specific amounts of money into a retirement or savings account.

Senior Discounts — A practice done at multiple businesses where people over a specific age, usually 55, get a discount on products or services.

SEP — A retirement plan that allows employers to contribute funds for their employees and receive tax deductions from it.

Stocks — A share in the ownership of a business.

Stock Broker — A profession that specializes in buying and selling stocks to make money for their clients.

Stock Dividend — Being paid in the form of more stocks instead of cash.

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Tax Free Rollover — Being able to move assets and funds from one retirement plan to another without having to pay taxes on the money.

Trust — A financial arrangement where a third party can hold assets for another beneficiary.

Trust Fund — A style of arrangement in which a third party uses assets to produce a fixed income for beneficiary.

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Uniform Life Expectancy — A chart that shows how long specific demographics of people are expected to live and how much money they will require to be properly funded for the rest of their life.

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VA Hospital — A hospital provided by the U.S. government that is designed to treat U.S. military veterans.

Valuation — The process of determining how much a specific asset is worth.

Variability — All of the different outcomes of different assets and investments.

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Will — A legally binding contract that can dictate how a person want’s their assets to be distributed in the event of the death or incapacitation. Wills can also handle other legal matters such as the care of underage children.

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Yield — How much interest a bond has produced divided by the price of the bond.

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