7 Retirement Terms You Need to Know

Don’t let retirement jargon intimidate you! Whether you’re speaking to an adviser, watching the news, reading or listening to the radio, it’s important to understand and comprehend the information you’re hearing. Compass Retirement Solutions has defined 7 terms that you need to know for retirement planning.

retirement

  1. Required Minimum Distribution (RMD) – This is the minimum amount you are required to withdraw from your account each year. Retirement plans generally require you to start taking withdrawals from your account when you reach 70½.
  2. Individual Retirement Account (IRA) – With a traditional IRA, you are allowed contribute a certain amount each year (usually $5,500 or $6,500) and deduct your contributions from income taxes. You pay taxes in the year you withdraw the money.
  3. Roth IRA – Similar to the traditional IRA. However, money invested within the Roth IRA grows tax free and there is no RMD.
  4. 401K – This is a retirement savings plan that allows workers save and invest a portion of their paycheck before taxes are taken out. It is employer dependent. Taxes aren’t paid until the money is withdrawn from the account.
  5. Fixed Index Annuity (FIA) – A fixed index annuity offers guaranteed lifetime income. While providing a principal guarantee, you earn a baseline fixed interest rate over a fixed term and are protected from stock market losses.
  6. Social Security – to provide a degree of economic security for the public, this is a program that uses public funds to supply income for retired individuals.
  7. Mutual Fund – A mix of stock, bond and other security investments kept by investors. Investors share the losses and earnings from shares in mutual funds.

Let us know if there are other terms that you would like to know more about or have added to the dictionary!

If you would like to book an appointment to speak with Marvin Mitchell, CEO of Compass Retirement Solutions, please call 314-373-1598 or email admin@compassretirementsolutions.com.