Retirement planning, decoded.
Plain-English definitions of the terms that actually matter in a retirement-income plan — written by Dan Casey and the Panic Proof Retirement team.
Concepts
4 termsSequence of Returns Risk
Sequence of returns risk is the danger that a bad market early in retirement — when you're withdrawing income from a portfolio — permanently damages the plan, even if the long-term average return is fine.
Read moreFiduciary
A fiduciary is a legal and ethical standard of care that requires an advisor to act in the client's best interest at all times — not merely recommend something 'suitable.' The fiduciary standard is the highest standard of care in financial services.
Read moreLongevity Risk
Longevity risk is the risk of outliving your money. It is arguably the single most important risk in retirement planning — and the one most likely to be underestimated, because longevity is improving faster than most plans assume.
Read moreAccumulation Phase vs. Distribution Phase
Accumulation is the phase of life when you save and grow retirement assets. Distribution is when you stop contributing and start drawing income. The two phases call for fundamentally different strategies — and many retirement-plan failures come from keeping an accumulation portfolio into the distribution phase.
Read moreTax
4 termsRoth Conversion
A Roth conversion is when you move money from a traditional (pre-tax) IRA or 401(k) into a Roth account — you pay the tax in the year of conversion, and in exchange the money grows and is withdrawn tax-free forever after.
Read moreNet Unrealized Appreciation (NUA)
NUA is an IRS rule that lets you transfer appreciated employer stock out of a 401(k) and pay long-term capital gains rates on the growth — instead of ordinary income rates. The savings can be tens of thousands, but the rules are strict and the window closes when you roll the 401(k) over.
Read moreRequired Minimum Distribution (RMD)
RMDs are the minimum amounts the IRS requires you to withdraw from most retirement accounts (IRAs, 401(k)s) each year starting at age 73 — whether you need the income or not. The distributions are taxable as ordinary income.
Read moreTax-Free Income
Tax-free retirement income is income that never gets taxed — by the IRS, by the state, or by the Social Security taxability formula. The three primary sources are Roth accounts, municipal bonds, and properly-structured life insurance or annuity distributions.
Read moreInsurance
4 termsFixed-Indexed Annuity
A fixed-indexed annuity (FIA) is an insurance contract that credits interest based on a stock-market index's movement — with a floor that protects you from ever losing principal to a market drop.
Read moreIncome Rider
An income rider is an optional feature on an annuity contract that guarantees a minimum lifetime income — regardless of the contract's investment performance or how long you live. It typically costs about 1% per year of the benefit base.
Read moreSurrender Period / Surrender Charge
A surrender period is the time (usually 7–10 years) during which an annuity contract assesses an early-withdrawal penalty — called a surrender charge — if you take out more than the contract's free-withdrawal limit.
Read moreLong-Term-Care Income Doubler
A long-term-care income doubler is an optional rider on an annuity that doubles (or substantially increases) the guaranteed income stream if the annuitant needs qualified long-term care — providing LTC cost coverage without requiring a separate LTC policy.
Read moreSocial Security / Medicare
2 termsSocial Security Full Retirement Age (FRA)
Full Retirement Age is the age at which you can claim 100% of your Social Security benefit. For anyone born in 1960 or later, FRA is 67. Filing earlier reduces the benefit; filing later (up to age 70) increases it by about 8% per year.
Read moreMedicare IRMAA
IRMAA (Income-Related Monthly Adjustment Amount) is an income-based surcharge added to your Medicare Part B and Part D premiums. Higher-income retirees pay substantially more for the same Medicare coverage — often thousands of dollars per year more than lower-income retirees.
Read moreReach Out Today
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