Retirement terms: The language of saving for your future

Knowing what’s what and who’s who can help you save for this life goal.
401(k) plan
This workplace retirement savings plan typically allows you to contribute money from your salary before taxes are taken out. Some plans offer a Roth 401(k) option that allows your withdrawals after retirement to be tax-free. In either the traditional or Roth options, money you contribute can be put into selected investments that are part of that plan, often including mutual funds, target-date funds and sometimes annuities. Unless you meet certain exceptions, you would not be able to access money from your 401(k) before you reach age 59 ½ without facing ordinary income tax as well as tax penalties.

403(b) plan
Similar to a 401(k) plan (see definition above), but this option is offered to employees of public schools or tax-exempt organizations.

Annuity
An annuity is a contract between you and an insurance company that allows you to contribute funds and choose from income options that include guaranteed lifetime income. They come in many types, including some that allow you to take advantage of any growth in the market to receive a potentially larger payment, or those that may allow you to protect your assets1. Annuities are designed for retirement and other long-term goals, and withdrawals before age 59 ½ may be subject to ordinary income taxes and early withdrawl penalties, depending on the specific annuity type.

Employer match
Many employers offer some kind of match of employee contributions to retirement plans. For example, an employer may offer to match 100% of your contribution up to 4% of your salary, meaning if you contribute 4% of your salary to your plan, your employer will contribute the same amount, doubling your savings.

Estate planning attorney
As your life changes, an estate planning attorney can help you determine how to protect your assets or pass them along to the next generation, as well as prepare the legal documents for important designations, such as power of attorney or a healthcare directive.

Financial consultant/financial advisor
A TIAA financial consultant or financial advisor can help you understand what your expenses might be in retirement and how your assets are positioned to create retirement income for you.

IRA
An Individual Retirement Account (IRA) is another tax-advantaged retirement savings account. Similar to a 401(k) or 403(b) plan, any growth is tax-deferred. The income tax treatment of distributions will depend on the type of account. An IRA may not allow you to access all the money in it before a certain age without penalty. IRAs are offered in several different types.

Required Minimum Distribution (RMD)
Certain types of retirement accounts, such as 401(k)s and Traditional IRAs, are subject to RMDs starting at age 70½, which means you must withdraw a certain percentage of the value of those accounts in cash each year. You’ll want to determine how best to meet these requirements while allowing your assets the potential to grow.

Social Security
The federal Social Security program provides for a certain amount of lifetime income based on the number of years you worked and your earnings during that time2. You have some options in determining when you start receiving Social Security payments, and the longer you wait, the larger your monthly payment may be.

Target-date fund
A type of investment commonly offered in retirement accounts, this fund adjusts the components (stocks, bonds, etc.) to be more conservative as you get closer to a target date of retirement.

As with all mutual funds, the principal value in a target-date fund is not guaranteed at any time, including at the target date. The target date represents an approximate date when investors may plan to begin withdrawing from the fund. There is no need to withdraw the funds at the target date.

Tax advisor
A tax advisor can tell you how your different accounts may impact your tax situation. Don’t forget that even though you may not have taxes taken out of a paycheck in retirement, you still have to pay taxes on certain types of disbursements, which count as normal income.

Vested
Some retirement plans have a certain amount of time in which you have to participate in the plan in order to claim the full value of an employee match. This is referred to as a vesting period. Money you contribute on your own is always yours, no matter how long you stay with an employer.

Investment products may be subject to market and other risk factors. See the applicable product literature or visit TIAA.org for details.
1 Annuity guarantees are subject to the claims-paying ability of the issuer. You can lose money when investing in variable annuities. Although variable annuities can provide an income stream in retirement that is guaranteed to last for your lifetime or other period you may select, the actual amount will rise or fall based on investment performance.
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