401(k), IRA, pension plans, retirement strategies, Social Security, and retirement income planning.
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Foundation terms you need to know first (10 terms)
Early retirement is the goal of achieving financial independence, allowing an individual to stop working for income before the traditional retirement age, often supported by passive income streams like those from real estate investments.
An Individual Retirement Account (IRA) is a tax-advantaged savings plan designed to help individuals save for retirement, offering benefits like tax-deferred growth or tax-free withdrawals.
Wealth accumulation is the process of increasing one's net worth over time through consistent saving, strategic investing, and growing assets, often with a focus on achieving long-term financial security and freedom.
Financial planning is the comprehensive process of managing your money to achieve personal and investment goals, involving budgeting, saving, investing, and risk management.
A retirement portfolio is a collection of investments specifically designed to generate income and growth to support an individual financially during their retirement years.
Complex strategies and professional concepts (4 terms)
A Self-Directed IRA (SDIRA) is a specialized retirement account allowing investors to hold alternative assets like real estate, private equity, and precious metals, offering enhanced control but requiring strict adherence to complex IRS regulations to avoid prohibited transactions and Unrelated Business Income Tax (UBIT).
Indexed Universal Life (IUL) is a type of permanent life insurance that offers a death benefit and a cash value component, where the cash value growth is linked to the performance of a market index, such as the S&P 500, typically with a floor and a cap on returns.
The Employee Retirement Income Security Act (ERISA) is a federal law that sets minimum standards for most voluntarily established retirement and health plans in private industry to protect individuals in these plans.
A specialized retirement investment structure where a Self-Directed IRA owns an LLC, granting the account holder "checkbook control" to directly invest in alternative assets like real estate, while maintaining tax-advantaged growth.
Indexed Universal Life (IUL) is a type of permanent life insurance that offers a death benefit and a cash value component, where the cash value growth is linked to the performance of a market index, such as the S&P 500, typically with a floor and a cap on returns.
An Individual Retirement Account (IRA) is a tax-advantaged savings plan designed to help individuals save for retirement, offering benefits like tax-deferred growth or tax-free withdrawals.
An investment account is a financial account used to hold various investment assets, such as stocks, bonds, mutual funds, and real estate-related securities, facilitating wealth accumulation and specific financial goals.
A mutual fund is a type of investment vehicle that pools money from many investors to invest in a diversified portfolio of stocks, bonds, or other securities, managed by a professional fund manager.
A contribution to a retirement account or investment that does not reduce current taxable income but may offer tax-deferred growth or tax-free withdrawals in the future, often used for backdoor Roth IRA conversions.
Penalty-free withdrawals refer to specific distributions from tax-advantaged retirement accounts, such as IRAs and 401(k)s, made before age 59½ without incurring the standard 10% early withdrawal penalty, provided they meet strict IRS criteria.
A critical metric that assesses the financial health of a pension plan by comparing its current assets to its projected future liabilities, indicating its ability to meet long-term obligations.
A Qualified First-Time Homebuyer Distribution allows individuals to withdraw up to $10,000 from their IRA without the usual 10% early withdrawal penalty, specifically for the purchase, construction, or reconstruction of a first home.
Real estate retirement planning involves strategically incorporating real estate investments into a broader retirement portfolio to generate income, build wealth, and achieve long-term financial security.
A Required Minimum Distribution (RMD) is the minimum amount that a retirement plan account owner must withdraw annually once they reach a certain age, typically 73, to avoid significant tax penalties.
Retirement income refers to the money an individual receives to cover living expenses after they have stopped working full-time, ensuring financial security in their later years.
A retirement portfolio is a collection of investments specifically designed to generate income and growth to support an individual financially during their retirement years.
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