Glossary
Plain-English definitions for retirement planning terms. Search to filter.
Pretax (401k / Traditional IRA)
What it is: Money not yet taxed. Withdrawals are typically taxed as ordinary income.
Why it matters: Pretax withdrawals and Roth conversions increase taxable income in the model.
Typical range: $0 to several million
Tip: Use your current account balance.
Roth balance
What it is: Money already taxed. Qualified withdrawals are typically tax-free.
Why it matters: Roth can be a tax-efficient withdrawal source later in retirement.
Typical range: $0 to several million
Tip: Use your current Roth account balance.
Taxable balance
What it is: After-tax brokerage/cash investments.
Why it matters: In this MVP, taxable withdrawals are treated simply (we'll improve capital gains later).
Typical range: $0 to several million
Tip: Include brokerage investments you plan to spend from.
Inflation rate
What it is: Annual inflation used to increase future spending.
Why it matters: Higher inflation means higher future spending needs.
Typical range: 0.02–0.04
Tip: 2.5% is a common planning assumption.
Return (post-ret)
What it is: Annual growth rate applied after retirement age.
Why it matters: Post-ret returns often assumed lower due to more conservative allocation.
Typical range: 0.03–0.06
Tip: Consider a lower number than pre-ret.
Return (pre-ret)
What it is: Annual growth rate applied before retirement age.
Why it matters: Higher returns can increase balances but also add risk in real life.
Typical range: 0.04–0.08
Tip: Use conservative assumptions for planning.
Annual spending (today)
What it is: How much you spend per year in today's dollars.
Why it matters: Spending drives how much you must withdraw from your portfolio.
Typical range: $30,000–$200,000+
Tip: If unsure, start with your annual budget and adjust.
Employer Pre-tax Match
What it is: Annual employer matching or profit-sharing contribution (in today's dollars).
Why it matters: Employer contributions boost your retirement savings without reducing your take-home pay.
Typical range: $0–$10,000+
Tip: Check your 401k statement for employer match amounts.
Employer Roth Match
What it is: Annual employer Roth matching contribution (rare, in today's dollars).
Why it matters: Some employers offer Roth matches which grow tax-free.
Typical range: $0 (uncommon)
Tip: Most employer matches are pre-tax. Only enter if your plan specifically offers Roth matches.
Person 401k/403b Pre-tax
What it is: Annual pre-tax retirement contribution by primary person (in today's dollars).
Why it matters: These contributions grow your pretax retirement accounts until you retire.
Typical range: $0–$23,000 (2024 limit)
Tip: Enter your annual 401k or 403b pre-tax contribution amount.
Person Roth 401k/403b
What it is: Annual Roth retirement contribution by primary person (in today's dollars).
Why it matters: These contributions grow your Roth retirement accounts until you retire.
Typical range: $0–$23,000 (2024 limit)
Tip: Enter your annual Roth 401k or 403b contribution amount.
Person Taxable Account
What it is: Annual taxable account contribution by primary person (in today's dollars).
Why it matters: These contributions grow your taxable accounts until you retire.
Typical range: $0–unlimited
Tip: Enter additional savings to taxable brokerage accounts.
Spouse 401k/403b Pre-tax
What it is: Annual pre-tax retirement contribution by spouse (in today's dollars).
Why it matters: These contributions grow your spouse's pretax retirement accounts until they retire.
Typical range: $0–$23,000 (2024 limit)
Tip: Enter your spouse's annual 401k or 403b pre-tax contribution amount.
Spouse Roth 401k/403b
What it is: Annual Roth retirement contribution by spouse (in today's dollars).
Why it matters: These contributions grow your spouse's Roth retirement accounts until they retire.
Typical range: $0–$23,000 (2024 limit)
Tip: Enter your spouse's annual Roth 401k or 403b contribution amount.
Spouse Taxable Account
What it is: Annual taxable account contribution by spouse (in today's dollars).
Why it matters: These contributions grow your spouse's taxable accounts until they retire.
Typical range: $0–unlimited
Tip: Enter additional savings to taxable brokerage accounts.
Current age
What it is: Your age today (in years).
Why it matters: We project year-by-year from current age to end age.
Typical range: 18–80+
Tip: Use your current age.
End age
What it is: The final age in the projection timeline.
Why it matters: A longer horizon increases uncertainty and the total amount you may spend.
Typical range: 85–100
Tip: Common planning ages are 90–95.
Retirement age
What it is: Age when you stop working (or switch to retirement spending/return assumptions).
Why it matters: We use pre-retirement return assumptions before this age, and post-retirement assumptions after.
Typical range: 55–70
Tip: If you plan part-time work later, we'll add that in a future version.
Enable RMDs
What it is: Turn on Required Minimum Distributions from pretax accounts.
Why it matters: RMDs force taxable withdrawals later in life (increasing taxable income).
Typical range: On/Off
Tip: Enable to model later-life required withdrawals.
RMD start age override
What it is: Optional age to start RMDs if you want to override the default.
Why it matters: Lets you test changes in rules or special scenarios.
Typical range: 72–75
Tip: Leave blank for default behavior.
Fill-to rate
What it is: The largest conversion that keeps your FINAL federal taxable income within this bracket — after the year's actual withdrawals, taxable Social Security, deductions, and the tax-funding withdrawal.
Why it matters: Targets the federal tax bracket and avoids spilling into higher rates. It does not optimize around Medicare IRMAA thresholds.
Typical range: 0.10, 0.12, 0.22, ...
Tip: Common choice is filling the 12% bracket before RMDs begin.
Fixed annual conversion amount
What it is: Convert a fixed dollar amount from pretax to Roth each year (if available).
Why it matters: Simple strategy; can be helpful in low-income years.
Typical range: $0–$100,000+
Tip: Be mindful of tax brackets and Medicare impacts (future enhancements).
Roth conversion strategy
What it is: How much pretax money you convert to Roth each year.
Why it matters: Conversions can reduce future RMDs and give tax-free withdrawals later, but can increase taxes now.
Typical range: None / Fixed / Fill-to-bracket
Tip: Start with None, then test Fill-to-bracket.
Stop conversions at age
What it is: The last age at which Roth conversions are performed. After this age the strategy is no longer applied even if pretax funds remain.
Why it matters: Once RMDs start, the RMD itself may consume most or all of the available bracket room. Stopping conversions at the RMD start age (e.g. 72) avoids stacking RMDs on top of a conversion.
Typical range: One year before RMD start age (e.g. 71 if RMDs start at 72)
Tip: Leave blank to let the strategy run as long as the pretax account has a balance.
Spouse current age
What it is: Your spouse's age today.
Why it matters: Used for spouse Social Security and future expansions (combined planning).
Typical range: 18–80+
Tip: Shown only when Filing Status = MFJ.
Spouse end age
What it is: Spouse's projection end age.
Why it matters: Planned for future enhancements.
Typical range: 85–100
Tip: Shown only when Filing Status = MFJ.
Spouse retirement age
What it is: Your spouse's retirement age.
Why it matters: Planned for future enhancements (spouse cashflows/returns).
Typical range: 55–70
Tip: Shown only when Filing Status = MFJ.
Spouse SS annual
What it is: Your spouse's estimated annual Social Security benefit for their selected claiming age, in today's dollars.
Why it matters: More SS reduces the amount you need to withdraw from investments.
Typical range: $0–$60,000+
Tip: Use the SSA.gov estimate for that claiming age (monthly figure × 12). The calculator inflation-indexes it to the claiming year, then grows it at your inflation rate as a COLA proxy.
Spouse SS start age
What it is: Age when your spouse starts Social Security benefits.
Why it matters: Social Security adds income and reduces required withdrawals from your portfolio.
Typical range: 62–70
Tip: Shown only when Filing Status = MFJ.
Filing status
What it is: Your federal tax filing status (Single or Married Filing Jointly).
Why it matters: Tax brackets and standard deduction depend on filing status.
Typical range: Single or MFJ
Tip: Choose MFJ if you file jointly with spouse.
Key Retirement Planning Terms
Understanding retirement terminology helps you get the most out of any planning tool. The most important concepts are summarized below; use the search box above for the full interactive glossary.
Required Minimum Distribution (RMD)
An RMD is the minimum amount the IRS requires you to withdraw annually from pre-tax retirement accounts (traditional IRA, 401k, 403b) once you reach age 73 (75 if born in 1960 or later, per SECURE 2.0). The amount is calculated by dividing your December 31 account balance by an IRS life-expectancy factor from the Uniform Lifetime Table. Failing to take an RMD incurs a 25% excise tax on the missed amount. Use the RMD Calculator to estimate your annual required withdrawal.
Roth IRA and Roth 401k
Roth accounts are funded with after-tax dollars. Qualified withdrawals in retirement are completely tax-free, including all growth. Unlike traditional IRAs, Roth IRAs have no RMDs during the owner's lifetime. Roth 401k accounts (designated Roth in an employer plan) do have RMDs but can be rolled to a Roth IRA upon retirement to eliminate that requirement. See the Roth Conversion Guide.
Roth Conversion
A Roth conversion moves money from a pre-tax account (traditional IRA or 401k) to a Roth account. The converted amount is added to ordinary income in the year of conversion, so you pay tax now in exchange for tax-free growth and withdrawals later. The strategy is most powerful during the low-income window between retirement and when Social Security and RMDs begin. The Roth Optimizer models the lifetime tax impact.
IRMAA (Income-Related Monthly Adjustment Amount)
IRMAA is a surcharge added to Medicare Part B and Part D premiums for beneficiaries whose Modified Adjusted Gross Income (MAGI) exceeds certain thresholds. IRMAA uses a two-year lookback: your 2024 MAGI determines your 2026 surcharge. For 2026 the surcharge ranges from roughly $970/year above the standard Part B premium at the first tier to about $6,900/year (Part B plus Part D combined) at the highest tier. Large Roth conversions or unexpected capital gains can push you into an IRMAA tier. Read the Medicare Guide for current thresholds.
Safe Withdrawal Rate (SWR)
The safe withdrawal rate is the annual percentage of your retirement portfolio you can spend without running out of money over a defined retirement horizon. The classic “4% rule” (from the Trinity Study) suggests 4% is sustainable over 30 years at historical stock/bond returns. However, your personal SWR depends on your asset allocation, retirement length, Social Security income, and spending flexibility. The Safe Withdrawal Rate Calculator helps you find your personalized rate.
Sequence of Returns Risk
Sequence of returns risk is the danger that a market downturn early in retirement permanently impairs your portfolio. Even if average returns over 30 years are identical, retiring into a bear market and withdrawing throughout the decline locks in losses before recovery can occur. This is why a 5% average return with bad early years can be far worse than 4% evenly spread. Strategies to mitigate it include holding a cash buffer, using a bond tent allocation, and delaying Social Security to reduce early withdrawals. Explore with the Sequence of Returns Risk Calculator.
Tax-Deferred vs. Tax-Free Growth
Tax-deferred accounts (traditional 401k, IRA) delay taxation: contributions may be deductible today, growth is untaxed, but all withdrawals face ordinary income tax. This is powerful during high-earning years. Tax-free accounts (Roth IRA, Roth 401k) are funded with after-tax dollars but withdrawals — including growth — are completely free of federal tax. For most people, a mix of both provides the most planning flexibility in retirement.
Social Security Full Retirement Age (FRA)
FRA is the age at which you qualify for 100% of your Social Security benefit (based on your earnings record). For people born 1960 or later, FRA is 67. Claiming before FRA permanently reduces your benefit (by up to 30% at age 62); delaying past FRA increases it by 8% per year up to age 70. Compare claiming ages with the Social Security Claiming Calculator.
COLA (Cost-of-Living Adjustment)
COLA is the annual increase in Social Security benefits tied to the Consumer Price Index for Urban Wage Earners (CPI-W). It is announced each October and applied to January payments. Recent COLAs: 8.7% for 2023 (high inflation), 3.2% for 2024, 2.5% for 2025, and 2.8% for 2026. In SmartRetireCalc, Social Security benefits are modeled growing at the general inflation rate you specify (a simplification of the actual CPI-linked COLA). See SSA COLA history.
Asset Allocation
Asset allocation is the mix of stocks, bonds, cash, and other assets in your portfolio. Stocks offer higher long-term growth but more short-term volatility; bonds provide stability and income. A common rule of thumb subtracts your age from 110 to get your stock percentage (e.g., age 60 → 50% stocks). In SmartRetireCalc you specify pre-retirement and post-retirement return assumptions, which implicitly reflect your allocation choice.
Standard Deduction
The standard deduction is a flat dollar amount the IRS lets you subtract from adjusted gross income before calculating federal income tax. For 2026 it is $16,100 for single filers and $32,200 for married filing jointly, with an extra age-65+/blind amount on top ($2,050 for an unmarried filer, $1,650 per qualifying spouse). A separate temporary “senior deduction” (up to $6,000 per person age 65+, income-phased) also applies for tax years 2025 through 2028. SmartRetireCalc applies the standard deduction when estimating federal taxes in your projection.
Income Gap
The income gap is the difference between your guaranteed retirement income (Social Security, pension, annuity) and your projected annual spending. The gap must be funded by withdrawals from your savings. A large gap relative to portfolio size accelerates the depletion rate. Use the Income Gap Calculator to measure yours, and the Retirement Readiness Score to see how prepared your savings are to cover it.
Ready to see these concepts in action? Run your retirement projection → or explore the Learning Center for in-depth guides.
Social Security annual (you)
What it is: Your estimated annual Social Security benefit for the claiming age you selected, in today's dollars.
Why it matters: SS reduces required withdrawals from investments.
Typical range: $0–$60,000+
Tip: Use the SSA.gov estimate for that claiming age. SSA shows a monthly figure — multiply it by 12. The calculator inflation-indexes this today's-dollar amount to your claiming year, then keeps growing it at your inflation rate as a COLA proxy.