Plain-language definitions for the acronyms and terms used throughout RetireWell — grouped by topic, not alphabetically, so related terms sit together.
Accounts and savings
Traditional 401(k) / IRA: pre-tax retirement savings — contributions reduce your taxable income now, but withdrawals in retirement are taxed as ordinary income.
Roth 401(k) / IRA: after-tax retirement savings — contributions don't reduce your taxable income now, but qualified withdrawals in retirement are entirely tax-free.
After-tax ("mega-backdoor") 401(k): a third 401(k) bucket some employer plans offer, beyond the regular traditional/Roth limit — lets you contribute more, then convert it to Roth.
HSA (Health Savings Account): a triple-tax-advantaged account for medical expenses — contributions reduce taxable income, growth is tax-free, and withdrawals for qualified medical costs are never taxed. Only available with a qualifying high-deductible health plan.
Employer match: money your employer adds to your 401(k) on top of your own contribution, typically up to a percentage of your salary — genuinely new money, not a reduction of your own pay.
Drawdown: a year where your expenses exceed your income, so the gap is covered by spending down savings rather than adding to them.
Net worth: everything you own (savings, retirement accounts, real estate) minus everything you owe (mortgages, loans, other debts).
Profile & projection inputs
Target retirement age: when your regular income (W-2 or self-employment) stops in the projection — the age you plan to stop working, not the age you claim Social Security.
Business expenses: your annual self-employment business costs, entered separately from personal expenses — subtracted from your gross self-employment income before tax is calculated on it.
One-time expenses: a major cost tied to a specific future year — a wedding, a renovation, a big purchase — added in full in that year only, unlike your regular monthly expenses which recur every year.
Account type: which of RetireWell's savings/investment categories an account falls into (401(k), Roth IRA, Traditional IRA, Brokerage, Savings, Checking, Crypto, HSA, Pension, Annuity, or Other) — drives which tax rules apply to its growth and withdrawals.
Death benefit today: what a life insurance policy would pay out if the insured person died right now — for policies whose payout changes over time, this is the current figure, separate from the value at maturity below.
Death benefit at maturity: what the policy is guaranteed to pay out once it reaches its maturity date, which can differ from today's death benefit for policies that build cash value over time.
Income and tax
RDP (Registered Domestic Partner): a legally registered domestic partnership (California and a few other states) — RetireWell treats RDP the same as married for filing status, Social Security household questions, and everywhere else marital status is asked.
AGI (Adjusted Gross Income): your total income minus specific "above-the-line" deductions (like traditional 401(k)/HSA contributions) — the starting point for most other tax calculations.
MAGI (Modified Adjusted Gross Income): your AGI with certain deductions added back — used to test eligibility for things like Roth IRA contributions and Medicare IRMAA surcharges, since the rules that use it define it slightly differently than plain AGI.
Standard deduction: a flat dollar amount the IRS lets every filer subtract from taxable income, no receipts needed — the alternative to itemizing.
Itemized deduction: the sum of specific deductible expenses (mortgage interest, state/local taxes, charitable gifts, high medical costs) — used instead of the standard deduction whenever it adds up to more.
SALT (State and Local Tax deduction): the itemized deduction for state income tax and property tax paid — federal law caps this deduction; California does not apply that same cap.
QBI (Qualified Business Income) deduction: a deduction equal to 20% of eligible self-employment or qualifying rental income, on top of your other deductions.
Marginal tax rate: the tax rate that applies to your next dollar of income — the number that actually matters when deciding whether one more dollar of income (or a Roth conversion) is worth it, as opposed to your average/effective rate across all your income.
QD/LTCG (Qualified Dividends / Long-Term Capital Gains): investment income taxed at preferential (lower) rates — dividends from stock held long enough, and gains on assets held over a year.
STCG (Short-Term Capital Gains): gains on assets held a year or less — taxed as ordinary income, not at the preferential LTCG rate.
NIIT (Net Investment Income Tax): a federal 3.8% surtax on investment income once your income crosses a threshold ($250,000 married / $200,000 single) — despite sounding state-specific, this is entirely a federal tax.
Additional Medicare Tax: a federal 0.9% surtax on wages or self-employment income above your filing-status threshold — separate from, and on top of, the regular Medicare payroll tax.
Self-employment tax: the Social Security and Medicare tax (normally split between employer and employee) that a self-employed person pays entirely themselves, via Schedule SE.
Retirement withdrawals and conversions
RMD (Required Minimum Distribution): the minimum amount you're legally required to withdraw from traditional retirement accounts each year, starting at age 73 or 75 depending on your birth year — skipping it triggers a real IRS penalty.
Roth conversion: voluntarily moving money from a traditional (pre-tax) retirement account to a Roth account, paying ordinary income tax on the converted amount now in exchange for tax-free growth and withdrawals later.
Uniform Lifetime Table: the official IRS table used to calculate exactly how much your RMD is each year, based on your account balance and your age.
Social Security
AIME (Average Indexed Monthly Earnings): your top 35 years of earnings, each adjusted for wage growth since the year you earned it, averaged into one monthly figure — the raw input to your benefit formula.
PIA (Primary Insurance Amount): your benefit at exactly your Full Retirement Age, before any early-claiming reduction or delayed-claiming increase is applied — the number everything else is calculated from.
FRA (Full Retirement Age): the age (67, for anyone in this projection) at which you receive your full, unreduced Social Security benefit — claiming earlier permanently reduces it, claiming later permanently increases it up to age 70.
COLA (Cost-of-Living Adjustment): the annual increase applied to Social Security benefits already being paid, intended to keep pace with inflation.
Spousal benefit: an amount up to 50% of your spouse's PIA that you can receive instead of your own benefit, if it's larger — available once your spouse has started claiming (or, for a divorced spouse, once divorced 2+ years).
Survivor benefit: what a widow(er) — or a divorced spouse from a 10+ year marriage — can claim on a deceased spouse's record, as early as age 60, worth 71.5%–100% of the deceased's benefit depending on claiming age.
Medicare
Medicare: the federal health insurance program most people become eligible for at age 65, made up of the parts below — RetireWell models its premiums and the pre-Medicare coverage gap for anyone who retires earlier.
Medicare Part A: hospital insurance — typically premium-free if you or your spouse paid Medicare payroll taxes long enough.
Medicare Part B: medical insurance (doctor visits, outpatient care) — has a monthly premium that increases with income via IRMAA.
Medicare Part C (Medicare Advantage): a private-insurance alternative that bundles Parts A, B, and usually D into one plan.
Medicare Part D: prescription drug coverage, either standalone or bundled into a Part C plan.
IRMAA (Income-Related Monthly Adjustment Amount): a surcharge on top of standard Medicare Part B/D premiums for higher-income households — based on your income from two years prior, not your current year's income.
Gift and estate tax
Gift tax annual exclusion: the amount you can give any one person each year with no gift-tax filing or lifetime-exemption impact at all ($19,000/person in 2026; double that with gift-splitting between spouses).
Lifetime gift/estate tax exemption: the total amount you can give away — during life or at death — before any federal gift or estate tax applies; a single shared exemption covers both, and it's indexed to inflation each year.
Portability (DSUE): a surviving spouse's ability to inherit their deceased spouse's unused lifetime exemption, electable by filing IRS Form 706 within 9 months of the first spouse's death (extensions available).
ILIT (Irrevocable Life Insurance Trust): a trust that owns a life insurance policy on your behalf — because the trust, not you, legally owns it, the death benefit is excluded from your taxable estate entirely.
Estate tax: a tax on the value of everything you own at death, above your available exemption — a federal 40% rate on the excess; a handful of states also levy their own, separate estate tax.
Chained CPI-U: the specific inflation measure the IRS actually uses to index gift/estate tax dollar figures forward each year — used here instead of this app's general planning-inflation rate, since using the wrong rate would overstate how fast these thresholds really grow.
Have a question this didn't answer? Use the AI advisor chat — it can see this same material — or send feedback using the Feedback capability.
Social Security