Retirement & Annuity Terms, Explained Simply

The process of converting an annuity's value into a stream of income payments, backed by the issuing insurance company and not FDIC insured.

A contract with an insurance company that can turn a lump sum into a stream of income, often for life.

The maximum interest a fixed-indexed annuity will credit for a given index period.

An insurer's financial capacity to meet its contractual obligations, which backs annuity guarantees.

An annuity that grows during an accumulation phase before income payments begin later.

An annuity that credits a set interest rate and protects principal from market losses.

An annuity that credits interest tied to a market index, with a floor that protects against index losses.

The minimum interest a fixed-indexed annuity will credit, protecting against index losses.

The amount you can withdraw from an annuity each year without a surrender charge.

An annuity purchased with a lump sum that begins paying income almost right away.

An optional annuity feature that provides lifetime withdrawals without giving up access to the contract value.

The formula a fixed-indexed annuity uses to measure index change and calculate interest.

The percentage of an index's gain that a fixed-indexed annuity uses to calculate credited interest.

A fee for withdrawing more than the allowed amount from an annuity during its early years.

An employer-sponsored retirement plan funded by payroll contributions, often with an employer match.

Retirement funds held in tax-advantaged accounts like IRAs and 401(k)s, generally taxed when withdrawn.

The minimum amount you must withdraw each year from most tax-deferred accounts once you reach the required age.

Moving retirement funds from one tax-advantaged account to another without triggering current taxes.

A retirement account funded with after-tax dollars where qualified withdrawals are tax-free.

A tax-deferred individual retirement account where withdrawals are generally taxed as income.

An annual increase to certain benefits, like Social Security, meant to keep pace with inflation.

The age at which you qualify for 100% of your Social Security benefit, based on your birth year.

Postponing taxes on growth until money is withdrawn, allowing earnings to compound in the meantime.

The risk of outliving your savings because retirement lasts longer than planned.

The danger that poor investment returns early in retirement, combined with withdrawals, permanently shrink your savings.