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Nest Egg
Definition
A nest egg is a substantial sum of money that has been saved or invested for a specific purpose, most commonly retirement.
Explanation
The term nest egg comes from the practice of placing a fake egg in a hen's nest to encourage laying. In finance, it refers to accumulated savings meant to grow over time. A retirement nest egg typically includes 401(k)s, IRAs, taxable investments, and cash reserves.
Protecting your nest egg involves diversification, managing withdrawal rates, and adjusting asset allocation to become more conservative as you approach retirement.
Example
After 40 years of saving, Maria's nest egg of $1.2 million in diversified investments allows her to retire comfortably with $48,000 annual income.