Financial Glossary

A 401(k) is an employer-sponsored retirement savings plan that allows employees to contribute pre-tax dollars, often with employer matching.

An annuity is a financial product that provides a guaranteed stream of income for a specified period, typically used for retirement income.

Early retirement means leaving the workforce before the traditional retirement age of 65, requiring significant savings to fund a longer retirement period.

FIRE is a movement focused on achieving financial independence and early retirement through aggressive saving, frugal living, and strategic investing.

An IRA is a personal retirement account that offers tax advantages for retirement savings, available to anyone with earned income.

A nest egg is a substantial sum of money that has been saved or invested for a specific purpose, most commonly retirement.

A pension is a retirement plan that provides a guaranteed regular income, typically based on salary history and years of service, paid by an employer.

Retirement is the stage of life when a person stops working full-time and lives on savings, investments, and pension income.

Retirement savings are funds set aside during working years specifically to provide income after retirement, typically held in tax-advantaged accounts.

A Roth IRA is a retirement account where contributions are made with after-tax dollars, allowing tax-free growth and withdrawals in retirement.

Retirement age is the age at which a person stops working full-time or begins drawing retirement benefits, typically ranging from 55 to 70.

Retirement income is the money received during retirement from various sources including savings, pensions, Social Security, and investments.

Social Security is a federal program that provides retirement, disability, and survivor benefits to eligible workers and their families.

The savings rate is the percentage of income set aside for future use rather than spent on current expenses, a key factor in retirement readiness.

The withdrawal rate is the percentage of retirement savings withdrawn annually to fund living expenses, with 4% being the traditional guideline.