Introduction to Personal Finance

Vocabulary flashcards based on concepts from personal finance and retirement planning.

Defined Benefit Plan

A retirement plan that provides a retiree with a guaranteed payment from their employer for the remainder of their life.

Defined Contribution Plan

A retirement account where both the employee and employer can contribute, with benefits based on contributions and investment returns.

Vesting

The process by which an employee earns the right to keep employer contributions to their retirement plan after a certain period of service.

Social Security

A government program that pays retirees a basic retirement income, funded primarily through current taxes.

Mutual Funds

Investment pools that gather money from multiple investors to purchase securities, often preferred for retirement investments.

IRA

Individual retirement account that offers tax benefits for retirement savings.

Roth IRA

An IRA allowing after-tax contributions and tax-free withdrawals in retirement.

Direct Rollover

Transferring retirement funds directly from one retirement account to another to avoid taxation.

Financial Planner

A professional who provides guidance on all aspects of a person's financial situation.

Conflicts of Interest

Situations where a financial advisor may benefit at the expense of the client, violating trust.

Fiduciary Standard

The obligation of a financial professional to act in the best interest of their client, disclosing all conflicts of interest.