Common Retirement Income Terms and Phrases

Do you speak retirement income?

Retirement income planning has a vocabulary all its own, and navigating it might leave you feeling like a tourist in a foreign country. If you don’t speak the language, our handy list of common phrases and retirement income planning terms and phrases will help you decipher the meaning behind the fine print.

Common Retirement Income Planning Terms and Phrases

  • 401(k) – An employer-established qualified plan that allows employees to save for retirement by making pre- or post-tax contributions, up to certain limits. The employer may match employee contributions, and taxes are deferred on earnings.
  • 403(b) – A retirement plan for eligible public school employees, certain ministers, and tax-exempt organizations, sometimes also called a tax-sheltered annuity (TSA) plan.
  • AGI – Adjusted Gross Income, a measure used to determine the amount of income that is taxable, calculated by your total yearly income minus allowable deductions. Also known as net income.
  • Fixed annuity – An insurance contract where, in exchange for a fixed amount of money that grows tax-deferred, the insurance company will pay an income stream, paid to someone at specific intervals, including for life. People can purchase many different types of annuities to guarantee a retirement income.
  • Appreciation – An increase in the value of an asset over time.
  • Back-end load – A charge or commission paid when an investment is sold, rather than when it is bought (opposite of a front-end load).
  • Basis – The initial value of an asset.
  • Benchmark – A standard that serves as a measure for the performance of a security, mutual fund, or other investment.
  • Beneficiary – The person designated to receive insurance, annuities, or other benefits after the death of its owner.
  • Bond – A certificate of debt issued by a corporation or a division of government.

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  • CFA – Stands for Chartered Financial Analyst, a type of licensed financial planner who has passed a rigorous training program.
  • CFP – Stands for Certified Financial Planner, a person who is certified by the CFP Board to provide financial guidance to consumers.
  • Capital – The amount initially invested in any fund, account, or other venture.
  • Capital gain/loss – The increase or decrease in value of an investment.
  • Capital gains distributions – A net gain that gets distributed to shareholders.
  • CD – Certificate of Deposit, issued by a bank or savings and loan association.
  • Contribution – Funds deposited into a retirement account.
  • Convertible bond – Bonds that can be exchanged for stock with the same company.
  • Diversification – The practice of distributing your investments over many different categories to minimize risk.

Download the full list so you can refer to it next time you talk to your licensed insurance or financial professional about your retirement income plan.