Retirement Basics
This is the stage of life when you finally stop setting alarms, stop attending meetings, and start aggressively defending your right to nap at 2 p.m.
What is retirement?
Uncle Sam lets you hit snooze on taxes with this type of 401(k) contribution… but he’s still keeping an eye on you later.
What is a traditional 401(k) contribution?
The IRS charges you a “why did you touch that early?” fee if you take money out before age 59½ (plus a side-eye).
What is the early withdrawal penalty?
This rule suggests taking about 4% of your retirement money each year so you don’t accidentally run out and have to move back in with your kids.
What is the 4% rule?
This famous stock index basically said “hold my data” and outperformed most actively managed funds in 2021.
What is the S&P 500?
This government program is like a monthly “thank you for surviving adulthood” check based on your lifetime earnings.
What is Social Security?
No matter how dramatic your exit from a job is, this part of your 401(k) is always 100% yours—no take-backs.
What are employee contributions (deferrals)?
These are the “you can’t ignore me forever” withdrawals the government forces you to take from traditional retirement accounts.
What are Required Minimum Distributions (RMDs)?
This strategy is basically not putting all your eggs, stocks, bonds, and hopes in one basket.
What is asset allocation?
About this many large-cap funds looked at the market in 2021 and said, “yeah… we’re not beating that.”
What is about 85%?
This concept is basically your money having babies… and then those babies having babies… and so on.
What is compound interest?
This 401(k) plan skips most of the “testing drama” but makes employers chip in like they’re legally obligated to care (because they are).
What is a safe harbor 401(k)?
These withdrawals are taxed as ordinary income because your future self didn’t pay taxes yet—surprise!
What are traditional 401(k) withdrawals?
This rule lets people 50+ contribute extra money because the IRS assumes they’re entering “catch-up mode” in life.
What are catch-up contributions?
This strategy is like setting up a financial relay race where bonds mature at different times to keep cash flowing steadily.
What is a bond ladder (or TIPS ladder)?
This retirement plan is like a promise from your employer saying, “We got you… as long as math and funding cooperate.”
What is a defined benefit plan?
The IRS draws a firm line in the sand on how much you can stash away each year in this “don’t-get-greedy” limit.
What is the elective deferral limit?
These retirement account withdrawals are basically tax-free victory laps in retirement (if you followed the rules).
What is a Roth IRA or Roth 401(k)?
This strategy is like paying taxes now on purpose so Future You can flex with fewer taxes later.
What is a Roth conversion?
This economic villain slowly reduces your purchasing power and makes everything feel like it costs “just a little too much.”
What is inflation?
This retirement plan is more like “good luck, hope your investments behave,” because your payout depends on contributions and market vibes.
What is a defined contribution plan?
Stick around long enough at a job, and you unlock this magical “the employer can’t take it back” status.
What is vesting?
This is the financial version of “new phone, who dis?”—moving retirement money from one account type to another.
What is a rollover?
This is the risk that your retirement plan says “you’ll be fine” but your lifespan says “actually… let’s keep going.”
What is longevity risk?
This type of government bond is basically the “inflation-proof armor” of investing because it adjusts with rising prices.
What are Treasury Inflation-Protected Securities (TIPS)?