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10-year rule. The requirement that most non-spouse beneficiaries empty an inherited IRA or 401(k) within 10 years of the original owner’s death, replacing the old lifetime stretch.
A
Activities of daily living (ADLs). The basic self-care tasks, bathing, dressing, eating, toileting, transferring, and continence, used to measure the need for long-term care and to trigger insurance benefits.
Adult Protective Services. The state agency that investigates suspected abuse, neglect, or financial exploitation of vulnerable adults.
Advance directive (living will). A document stating your wishes about life-sustaining medical treatment if you cannot speak for yourself. Often paired with a healthcare proxy and a portable POLST or MOLST order.
Affinity fraud. Investment fraud that exploits shared membership in a group, a church, club, or community, to borrow trust the scammer has not earned.
Annual earnings limit. The yearly amount you can earn from work while collecting Social Security before Full Retirement Age before benefits are withheld. It is set by SSA and rises most years.
Annual Enrollment Period. The October 15 to December 7 window each year when anyone can join, drop, or switch Part D and Medicare Advantage plans, effective January 1.
Appeals ladder. The five-level process for challenging an Original Medicare denial: Redetermination, Reconsideration, Administrative Law Judge hearing, Medicare Appeals Council, and federal court. Each level is a fresh review.
B
Beneficiary designation. The instruction on file with an account (IRA, 401(k), life insurance, annuity, POD/TOD account) naming who inherits it. It passes the money directly to that person and overrides your will and any trust.
Benefits cliff. The situation in which a small increase in income pushes a lower-income retiree over a program’s eligibility limit, causing the loss of a benefit worth more than the added income.
Birthday Rule. A state-level protection, offered in some states, giving Medigap policyholders an annual window around their birthday to switch to an equal or lesser Medigap plan with no medical underwriting.
Bracket management. Deciding each year how much income to realize so you fill up the lower tax brackets without spilling into a higher one, often by withdrawing from or converting tax-deferred accounts.
Break-even analysis. A comparison that finds the age at which the larger checks from delaying Social Security add up to more total money than starting earlier would have. Before that age the early claimer has collected more; after it, the person who waited pulls ahead.
C
Certified Divorce Financial Analyst (CDFA). A financial professional who specializes in the financial dimensions of divorce, modeling how proposed settlements play out over a retirement.
Contingent beneficiary. The backup who inherits an account only if the primary beneficiary dies before you or declines. Without one, an account can fall into your estate and probate.
Continuing Care Retirement Community (CCRC). A community offering a continuum from independent living through assisted living and skilled nursing on one campus, usually for a substantial entry fee plus monthly fees with varying refund terms.
Conversion ladder. Spreading Roth conversions across several years, each sized to fill a target tax bracket, so a large traditional balance is moved to a Roth without ever crossing into a higher bracket.
Credit freeze. A free restriction placed with the credit bureaus that stops new accounts from being opened in your name. You can lift it temporarily when you need credit.
Custodial care. Non-medical help with the activities of daily living, bathing, dressing, eating, toileting, moving, that most people need for extended periods. Medicare does not cover it.
D
Deemed filing. The rule that, for people born January 2, 1954, or later, filing for your own retirement benefit also files you for any spousal benefit, so you receive the higher of the two. Survivor benefits are exempt.
Defined-benefit pension. A traditional pension that pays a specific monthly amount for life, set by a formula of service, salary, and a factor, with the employer bearing the investment risk.
Delayed Retirement Credit (DRC). An increase of 8 percent per year, added to your Social Security benefit for each year you wait to claim past Full Retirement Age, up to age 70. The credits are permanent and stop accruing at 70.
Disabled Adult Child (DAC) benefit. A benefit paid on a parent’s Social Security record to a son or daughter whose qualifying disability began before age 22. It can continue for life.
Divorced-spouse benefit. A benefit you can claim on an ex-spouse’s record if the marriage lasted at least 10 years and you are now unmarried. It takes nothing from the ex and can be claimed without contacting them.
Downsizing. Selling a larger home and buying a smaller one in retirement. It improves finances only after accounting for transaction costs like commissions, closing costs, and moving.
Durable financial power of attorney. A document naming someone to manage your money and pay your bills if you become unable to. ‘Durable’ keeps it valid after you lose capacity.
E
Earnings test. The Social Security rule that withholds part of your benefit if you claim before Full Retirement Age and earn wages or self-employment income above an annual limit. It stops completely at Full Retirement Age.
Expedited appeal. A fast Medicare appeal, often decided within 72 hours, for cases where a delay could seriously jeopardize your health, such as a premature hospital discharge or an urgently needed service.
Extra Help (Low Income Subsidy). A federal program that substantially lowers Medicare Part D prescription drug costs for eligible lower-income beneficiaries. Applied for through Social Security or state Medicaid.
F
Family maximum. A cap on the total Social Security benefits payable on one worker’s record, generally 150 to 180 percent of the worker’s full benefit. It trims dependents’ benefits but never the worker’s own.
Fee-only advisor. An advisor paid only by you, with no commissions from products sold, which carries the fewest conflicts of interest.
Fiduciary. A professional legally required to act in your best interest at all times, as opposed to one held only to a lower suitability standard.
Five-year look-back. Medicaid’s review of the five years of finances before you apply. Assets transferred for less than fair value during that window can trigger a penalty period.
Five-year rule (Roth). Two separate rules: one requires a Roth to be open five years (and you 59 and a half) for earnings to be tax-free; the other applies a five-year clock to each conversion for the early-withdrawal penalty.
Fixed-indexed annuity (FIA). An annuity whose credited return is tied to a market index but limited by a cap rate, a participation rate, and sometimes a spread, and usually excluding the index’s dividends.
Form 5329. The IRS form used to report a missed or short RMD and to request a waiver of the excise tax for reasonable cause.
Form SSA-44. The Social Security form used to request that IRMAA be recalculated on your lower current income after a qualifying life-changing event such as retirement, divorce, or the death of a spouse.
Formulary. The list of prescription drugs a Part D or Medicare Advantage plan covers, organized into cost tiers. Formularies change each year and vary by plan.
Formulary exception. A request, backed by your prescriber, asking a plan to cover a drug that is not on its formulary or to lower the tier it is on. A denial can be appealed.
Free-look period. A window after buying an annuity, commonly 10 to 30 days depending on state, during which you can cancel and get your money back.
Full Retirement Age (FRA). The age at which you can receive 100 percent of your earned Social Security benefit. It depends on your birth year and is 67 for anyone born in 1960 or later. It is the baseline the whole claiming system is measured from, and it is separate from the Medicare age of 65.
G
Government Pension Offset (GPO). A rule, now repealed, that reduced the spousal and survivor Social Security benefits of someone receiving a pension from non-covered government work.
Gray divorce. Divorce at age 50 or older, the fastest-growing kind of divorce, which restructures retirement income for both parties and requires rebuilding a plan built for two into a plan for one.
Guaranteed-issue rights. The right, mainly during your Medigap Open Enrollment window and certain situations, to buy any Medigap policy regardless of your health, with no medical underwriting.
H
Health savings account (HSA). A tax-advantaged medical savings account. Enrolling in any part of Medicare ends your ability to make new HSA contributions, and Part A backdates up to six months.
I
Income rider. An optional annuity add-on that guarantees lifetime income, calculated from a bookkeeping figure called the benefit base, in exchange for an annual fee. The benefit base is not withdrawable cash.
Initial Enrollment Period. The seven-month window around your 65th birthday, three months before through three months after, when you first sign up for Medicare.
IRMAA (Income-Related Monthly Adjustment Amount). A surcharge added to Medicare Part B and Part D premiums for beneficiaries whose income is above certain thresholds. It works like a cliff and is based on income from two years earlier.
J
Joint-and-survivor annuity. A pension payout that pays a somewhat smaller check while you live and then continues paying your surviving spouse a set percentage (50, 75, or 100 percent) for life.
L
Late enrollment penalty. A permanent surcharge added to your Medicare premium for signing up late: 10 percent per year for Part B and about 1 percent per month for Part D.
Letter of instruction. An informal, non-binding roadmap for your executor and family listing income sources, accounts, advisors, digital assets, document locations, and final wishes.
Long-term care insurance (LTCI). Insurance that pays for custodial care Medicare does not cover. Bought while healthy, it pays when you cannot perform a set number of ADLs or have cognitive impairment, subject to an elimination period.
Long-Term Care Ombudsman. A free, state-based advocate who helps nursing home and assisted living residents and families resolve complaints about their care.
M
Master document inventory. A current list of all income sources, financial accounts, insurance policies, estate documents, advisor contacts, and secure digital access, the foundation of a command center.
Medicaid spend-down. The process of using up most countable assets on your care until you fall under your state’s limit and qualify for Medicaid, which does pay for long-term custodial care.
Medical underwriting. An insurer’s review of your health to decide whether to sell you a policy, at what price, or to deny it. It can apply to Medigap outside your protected windows.
Medicare Advantage (Part C). A private plan that bundles Parts A and B, usually drug coverage, and often extras, using provider networks and prior authorization, typically for a low or zero premium.
Medicare Savings Programs (MSPs). State-run programs (QMB, SLMB, QI) that pay some or all of a lower-income beneficiary’s Medicare premiums and cost-sharing.
Medigap (Medicare Supplement Insurance). A private policy that pays the deductibles and coinsurance Original Medicare leaves to you. Plans are standardized by letter (A through N); Plan G is common for those newly eligible today.
Medigap Open Enrollment Period. A roughly six-month window starting when you are 65 or older and enrolled in Part B, during which insurers must sell you any Medigap policy without health screening.
Modified adjusted gross income (MAGI). For IRMAA, essentially your adjusted gross income plus any tax-exempt interest. It is the income figure Medicare uses to decide your premium tier.
Monthly earnings test (grace-year rule). A first-year exception that lets you receive a full Social Security check for any month you earn under a monthly limit, no matter how high your earnings were earlier that year.
my Social Security. The free online account at SSA.gov where you can see your own estimated benefit at each claiming age, review your earnings record, and manage your benefits. Its estimates use your actual earnings, not a national average.
N
Net Investment Income Tax (NIIT). A 3.8 percent federal surtax on investment income (interest, dividends, capital gains, rental income) once your modified adjusted gross income rises above a threshold that is not adjusted for inflation.
Non-borrowing spouse protections. Federal rules that can let a younger spouse not named on a reverse mortgage remain in the home after the borrower dies, if specific conditions are met.
O
Original Medicare. The traditional Medicare program made up of Part A (hospital) and Part B (medical). It can be paired with a Medigap supplement and a Part D drug plan.
Out-of-pocket drug cap. An annual limit, added by recent federal law, on what a Medicare Part D beneficiary pays out of pocket for covered prescription drugs.
Overpayment. A notice that Social Security paid you more than you were due, often triggered by the earnings test, which SSA asks you to repay. It can be appealed, waived, or repaid over time.
P
Pension Benefit Guaranty Corporation (PBGC). The federal agency that insures many private-sector defined-benefit pensions and pays benefits up to legal limits if a covered plan fails.
Per stirpes. A designation under which a deceased beneficiary’s share passes down to that beneficiary’s own children, rather than being split among the surviving beneficiaries (per capita).
Primary Insurance Amount (PIA). The full monthly Social Security benefit you have earned, calculated from your lifetime earnings. It is the amount you receive if you claim exactly at your Full Retirement Age, before any reduction for early claiming or credit for delaying.
Probate. The court process that distributes assets passing through your will. Beneficiary designations and POD/TOD instructions bypass it.
Provisional income. A special IRS figure, also called combined income, used to decide how much of your Social Security is taxed. It equals your adjusted gross income plus any tax-exempt interest plus one half of your Social Security benefit.
Q
Qualified Charitable Distribution (QCD). A direct transfer from an IRA to a qualifying charity, available at age 70 and a half, that counts toward your RMD but never appears as taxable income. Especially valuable for non-itemizers.
Qualified Domestic Relations Order (QDRO). The separate legal order required to divide an employer retirement plan (401(k), 403(b), pension) in a divorce without taxes and penalties. A divorce decree alone does not divide the account.
R
Reconsideration. A formal appeal asking Social Security to review a decision, such as an overpayment notice, generally filed within 60 days. Collection can be paused while it is reviewed.
Required Minimum Distribution (RMD). The amount the IRS requires you to withdraw each year from tax-deferred retirement accounts once you reach your RMD starting age (73 or 75, by birth year), so the deferred tax is finally paid.
Retirement command center. One organized place, physical or digital, holding the essential facts of your financial life so you can manage it and your family can step in if needed.
Reverse mortgage (HECM). A federally insured loan for homeowners 62 or older that converts home equity into cash without monthly mortgage payments. The balance rises over time; it is non-recourse and you keep title, but must pay taxes, insurance, and upkeep.
Roth conversion. Moving money from a traditional IRA or 401(k) into a Roth account and paying ordinary income tax on the amount now, so it grows tax-free afterward and is no longer subject to RMDs. There is no income limit.
S
Sequence-of-returns risk. The danger that a market downturn early in retirement does outsized, lasting damage because you are selling investments for income while prices are low.
Single premium immediate annuity (SPIA). The simplest annuity: you pay a lump sum and the insurer pays a fixed income for life starting now, with no complex crediting formula, effectively a personal pension.
Single-life annuity. A pension payout that pays the largest monthly check but stops completely when you die, leaving no continuing income for a survivor.
Special Enrollment Period. A window to enroll in Medicare without penalty after certain events, most importantly the end of active-employment coverage at a large employer.
Spousal benefit. A Social Security benefit a husband or wife can claim on their partner’s earnings record, worth up to 50 percent of the worker’s full benefit at the claiming spouse’s Full Retirement Age. It does not grow past that age.
Still-working exception. A rule letting you delay RMDs from your current employer’s 401(k) while you keep working there, if you do not own more than 5 percent of the company. It does not apply to IRAs.
Surrender charge. A penalty for withdrawing money from an annuity during an initial lock-up period, often 7 to 10 years. It starts high and declines each year until it reaches zero.
Survivor benefit. A benefit a widow or widower can claim on a deceased spouse’s record, worth up to 100 percent of what the deceased was receiving. It can begin as early as age 60 at a reduced rate and can be switched with your own benefit.
Survivor’s penalty. The higher tax burden a surviving spouse often faces the year after a death, because they file as a single person, with narrower brackets, a smaller standard deduction, and lower IRMAA thresholds.
T
Tax diversification. Holding retirement money across all three tax buckets so you can draw from whichever one keeps a given year’s taxes lowest, rather than being locked into one tax treatment.
Tax location. The idea that where your money sits, taxable, tax-deferred, or tax-free, affects your taxes as much as how much you have. Managing tax location is central to a good withdrawal plan.
Tax-deferred account. A traditional IRA, 401(k), or 403(b) funded with pre-tax money. Growth is untaxed until withdrawal, when every dollar is taxed as ordinary income. These accounts are subject to RMDs.
Tax-free (Roth) account. A Roth IRA or Roth 401(k) funded with money already taxed, where qualified withdrawals, including all growth, come out completely tax-free.
Taxable account. An ordinary bank or brokerage account funded with after-tax money, where you pay tax each year on interest and dividends and pay capital gains tax when you sell at a profit.
Taxation torpedo. The effect in which each extra dollar of income in the threshold zone makes up to 85 cents more of your Social Security benefit taxable, spiking your true marginal tax rate well above your stated bracket.
Trusted contact. A person you authorize your bank or brokerage to reach if they suspect fraud or exploitation on your account. It costs nothing to add.
Two-factor authentication. A security step requiring a second proof of identity beyond your password, so a stolen password alone cannot access your account.
Two-year lookback. The rule that your IRMAA surcharge for a given year is based on the modified adjusted gross income from your tax return two years earlier.
U
Uniform Lifetime Table. The IRS table of life expectancy factors used to calculate your RMD. You divide your prior year-end account balance by the factor for your age.
V
Verification protocol. A family plan, such as an agreed password or a call back on a known number, used to confirm any urgent money request before acting. It defeats grandparent and voice-cloning scams.
Voluntary suspension. Pausing your Social Security benefit any time from Full Retirement Age up to age 70 so it earns Delayed Retirement Credits for the suspended months. Unlike a withdrawal, it does not require repaying benefits already received.
W
Waiver (of overpayment). A request, filed on Form SSA-632, asking Social Security to forgive an overpayment because it was not your fault and repaying it would cause hardship or be unfair.
Windfall Elimination Provision (WEP). A rule, now repealed, that reduced a worker’s own Social Security benefit if they also had a pension from work not covered by Social Security.
Withdrawal of application. A one-time option to cancel a Social Security claim within 12 months of starting it, filed on Form SSA-521. It resets your decision as if you had never claimed, but you must repay all benefits you received.
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