Reference

Glossary

Plain-English definitions of the retirement, tax and investing terms used in the app and the guides.

401(k), 403(b), 457(b): Retirement savings plans offered through work. Traditional (pre-tax) contributions lower your taxes now; withdrawals are taxed later. Roth versions are taxed now and tax-free later.
ACA subsidy cliff: The income above which the marketplace premium tax credit ends entirely. For 2026 coverage it's 400% of the federal poverty line. One dollar over can cost the whole credit.
AGI (adjusted gross income): Your total income minus certain deductions like pre-tax retirement contributions. Many tax rules and limits are based on it.
AMT (alternative minimum tax): A second way of calculating federal tax that you pay instead if it comes out higher. It mostly affects higher incomes and certain deductions.
Annuity: A contract, usually with an insurance company, that turns a lump sum into a stream of payments, often for life.
Asset allocation: Your mix of investments, such as how much is in stocks, bonds and cash. It drives most of a portfolio's ups and downs.
Asset location: Which kind of account holds each investment: taxable, traditional or Roth. Location changes after-tax returns because each account is taxed differently.
Basis (cost basis): What you paid for an investment. When you sell, only the gain above your basis is taxed.
Beneficiary designation: The form that names who receives a retirement account, life insurance policy or transfer-on-death account when you die. It overrides your will for that account.
Block bootstrap: A way to simulate markets by stringing together random blocks of consecutive historical years. Keeping years together preserves real patterns, such as runs of bad years. The app uses five-year blocks by default.
Bracket: A range of income taxed at one rate. Only the dollars inside each range are taxed at that range’s rate.
Capital gain: Profit from selling an investment for more than you paid. Held over a year, it’s usually taxed at lower rates.
Catch-up contribution: An extra amount people 50 or older can contribute to a workplace plan or IRA each year. In 2026 it's $8,000 for a 401(k), 403(b) or governmental 457(b), or $11,250 at ages 60 to 63.
Chance of success: The share of simulated futures in which your plan pays every bill until the plan ends. It measures how often a shortfall happens, not how bad it is.
Comfort level: How likely you're willing to be to need a spending cut later: about 1 in 10 (Cautious), 1 in 5 (Balanced) or 3 in 10 (Flexible). It sets your safe-to-spend figure and your guardrails.
Cost-of-living adjustment (COLA): The yearly increase in Social Security benefits to keep up with prices. Benefits paid in 2026 rose 2.8%.
Deferred compensation (NQDC): Pay your employer holds and pays you later, often after you leave. Taxed when paid out. Unlike a 401(k), it isn’t protected if the employer fails.
Earnings test: A Social Security rule that withholds some benefits if you claim before full retirement age and keep working above a set limit. Withheld benefits are credited back through a higher benefit at full retirement age.
Essentials: Spending you mark as essential, such as housing and food. Spending strategies and guardrails never cut it unless you allow it.
Full retirement age: The age at which you receive your full Social Security benefit, your PIA. It's 67 for anyone born in 1960 or later.
Guardrails: Investment balances that trigger a change in spending: a cut if balances fall below the lower guardrail, a raise if they rise above the upper one.
HSA (health savings account): Tax-advantaged savings for medical costs, available with a high-deductible health plan. Money for qualified medical costs is never taxed.
Inflation: Prices rising over time. A dollar next year buys a little less than a dollar today. “Today’s dollars” removes inflation so numbers are comparable.
IRA: An individual retirement account you open yourself. Traditional IRAs may be tax-deductible now and taxed later; Roth IRAs are taxed now and tax-free later.
IRMAA: A Medicare premium surcharge for people with higher income. It’s based on your income from two years earlier.
Look-through: Splitting a fund into what it holds, such as US stocks, international stocks and bonds, so your true allocation shows.
MAGI (modified adjusted gross income): Adjusted gross income with certain amounts added back. Different rules define it differently. Medicare surcharges and ACA premium tax credits each use their own version.
Median: The middle result: half of outcomes are higher and half are lower. It's the 50th percentile.
Milestone: A moment other parts of your plan can start or stop at, such as each person’s retirement, a home purchase or a child turning 18. Moving a milestone moves everything tied to it.
Monte Carlo simulation: Testing your plan against thousands of possible futures with different market ups and downs to see how often it works.
Nominal dollars: Amounts as they'll actually appear in a future year, including inflation. Also called future dollars.
Percentile: Where a result ranks among all simulated futures. The 10th percentile means 1 in 10 futures were worse; the 50th is the middle.
PIA (primary insurance amount): Your Social Security benefit if you start at your full retirement age. Claiming earlier lowers it; waiting until 70 raises it.
Portability: A rule that lets a surviving spouse use the unused federal estate tax exclusion of the spouse who died first, if the executor elects it.
Premium tax credit: A subsidy that lowers the cost of a health insurance marketplace (ACA) plan, based on your income.
Pro-rata rule: If you have both pre-tax and after-tax money in your IRAs, each withdrawal or Roth conversion is taxed in proportion to those shares across all your IRAs.
Probate: The court process for settling a will. Accounts with beneficiaries, joint accounts and trusts usually skip it.
Qualified charitable distribution (QCD): A gift sent directly from an IRA to a qualifying charity, from age 70.5. It counts toward your required distribution and isn't included in your income. The 2026 limit is $111,000.
Qualified dividends: Dividends from most US and many foreign company stocks held long enough. They're taxed at the lower capital gains rates.
Rebalancing: Selling part of what has grown and buying what has lagged, to bring your mix back to its target.
Rebalancing band: How far an asset can drift from its target before you rebalance. The app's default is 5 percentage points or 25% of the target, whichever is smaller.
RMD (required minimum distribution): The amount the law requires you to withdraw from pre-tax retirement accounts each year once you reach the starting age (73 or 75 depending on birth year).
Roth account: A retirement account funded with money that's already been taxed. Qualified withdrawals, including growth, are tax-free.
Roth conversion: Moving money from a pre-tax account to a Roth account. You pay tax on it now so future growth can be tax-free.
Safe to spend: How much you can spend this month, at your comfort level with risk, based on your actual balances and plan.
Safe-to-spend set-aside: A share of your investments left out of what safe-to-spend and the guardrails count on, so a plan doesn't spend down to nothing in its final year. The default is 10%.
Scenario: A version of your plan that keeps only what you change. Everything else follows your base plan.
Senior deduction: An extra federal deduction of $6,000 for each person 65 or older, for tax years 2025 through 2028. It phases out at higher incomes.
Sequence-of-returns risk: The danger that bad markets early in retirement, while you’re withdrawing, do lasting damage even if average returns are fine.
Spousal benefit: A Social Security benefit based on a spouse's work record, up to 50% of their PIA at full retirement age.
Standard deduction: The flat amount you subtract from income before tax if you don't itemize. For 2026 it's $16,100 for a single filer and $32,200 for a married couple filing jointly.
Step-up in basis: When someone inherits an investment, its basis resets to its value at death, so gains before death aren’t taxed.
Survivor benefit: The Social Security benefit a widow or widower receives based on the deceased spouse's record. The survivor keeps the larger of their own benefit and the survivor benefit.
Tax gain harvesting: Selling investments at a gain in a year when long-term gains are taxed at 0%, then buying them back, to raise your cost basis.
Taxable account: An ordinary brokerage or bank account with no special tax treatment. You pay tax on interest and dividends each year and on gains when you sell.
Today's dollars: Amounts adjusted to remove inflation, so a future figure buys what that amount buys today. Also called real dollars.
Today’s dollars and future dollars: Today’s dollars take inflation out, so an amount in 2045 buys what that amount buys now. Future dollars are the amounts you would actually see then, and grow with inflation. Screens with a “Today’s $ / Future $” switch let you choose.
Traditional account: A pre-tax retirement account such as a traditional IRA or 401(k). Contributions may be deductible. Withdrawals are taxed as ordinary income.
Withdrawal order: The order in which you draw from cash, taxable, traditional, Roth and HSA accounts to cover spending. It affects lifetime taxes.
Withdrawal rate: How much you take from your investments in a year, as a share of their value.