Basic Retirement Terms

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Basic Retirement Terms

Here is a glossary of some basic terms used in all areas of retirement planning.

• FICA. The Federal Insurance Contributions Act. It requires that money be deducted from employee paychecks and deposited into the Social Security trust fund. This money is used to support retirees and some disabled persons and their dependents.
• Qualified. Able to receive special tax benefits, such as deferral of taxes.
• Retirement. The termination of employment due to choice, age, or physical limitation. Certain benefits, such as Social Security payments, are available to those who retire and qualify.
• Retirement income. Unearned income available to a person for retirement expenses. If retirement income comes from a retirement plan or annuity, it will take effect at a required age. The amount and how often it is paid are spelled out in the terms of the plan or annuity.
• Rollover. The moving of funds from one retirement investment plan to another, usually of the same type.
• Social Security. The system of government benefits that provides support to retirees, the disabled, needy children, qualifiers for unemployment compensation, and certain others. Deductions from payrolls finance all these programs.