Plain-English definitions for the terms you'll encounter on your financial journey.
A type of pension plan where the employer credits a participant's account with a set percentage of their yearly compensation plus interest.
An increase in Social Security or pension benefits to help maintain purchasing power as inflation rises.
A traditional pension plan that promises a specific monthly benefit at retirement based on the employee's salary and years of service.
Full Retirement Age is the specific age set by the government at which you become eligible to receive your maximum monthly Social Security retirement benefit. It is essentially the 'finish line' the government uses to decide when you have worked long enough to collect your full pension payment.
Government Pension Offset is a rule that reduces the Social Security benefits for people who also receive a government pension from a job that did not pay into Social Security. It acts like a balancing mechanism to ensure you don't receive double benefits from two separate taxpayer-funded retirement systems.
A large organization, such as a pension fund or insurance company, that invests huge sums of money in the financial markets.
A one-time payment of the entire balance of a retirement account or pension instead of receiving periodic payments.
The age at which a participant becomes eligible to receive full, unreduced benefits from a pension or retirement system.
The Pension Benefit Guaranty Corporation is a government agency that acts as an insurance company for traditional company pensions. If your employer goes out of business and can't pay your retirement benefits, this group steps in to make sure you still get your monthly check.
A fund into which an employer makes regular contributions to provide a guaranteed monthly income for an employee after they retire.
An employer-sponsored retirement plan that guarantees a specific monthly benefit to employees upon retirement.
A retirement plan that allows self-employed individuals and small business owners to contribute to their own and their employees' retirement savings.
The total length of time an employee has worked for a specific employer, often determining eligibility for certain pension benefits.
A needs-based benefit paid to wartime veterans who meet certain age or disability requirements and have limited income.
The Windfall Elimination Provision is a rule that may reduce the Social Security benefits of someone who also receives a pension from a job where they did not pay into the Social Security system.