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Annuity (income)
Capital exchanged for contractual payments for life/a period. Increases, survivor rights and retained rights vary; exchanged capital is not freely investable. Provider/protection dependence remains. It differs from a portfolio withdrawal rule.
Bridge funding
Resources for spending before another income begins. Net expenses, available income and dates determine need; delays/lower payments enlarge it. Future entitlement cannot pay earlier bills without interim resources.
Cash bucket
Portfolio cash/suitable instruments earmarked for withdrawals, possibly simplifying payments without changing other holdings’ risks. Size, access and refill rules matter; the label creates no capital or protection elsewhere.
Defined-benefit pension
Benefits determined by a scheme formula, commonly earnings/service, not solely personal investment balance. Dates, increases, survivor rights and local protection vary; read terms before counting income.
Defined-contribution pension
In the individual-account form here, contributions and net investment results determine retirement capital, promising no fixed lifelong income. Access/payout depend on scheme/country; collective and other structures require separate terms.
Capital rather than fixed income
Discretionary spending
Expenses reducible, postponable or droppable with acceptable consequences. Size, speed and sustainability of cuts matter. Infrequent costs are not automatically discretionary; a one-year cut may fail over several years.
Essential spending
Expenses a household must keep funding, including housing, food, care and obligations as applicable. Include irregular bills. A formula permitting cuts establishes no feasible reduction of these expenses.
Fixed nominal withdrawal
An unchanged currency withdrawal across periods, without inflation adjustment. Rising prices reduce what it buys; changing taxes/charges can change spendable money even when gross withdrawal stays fixed.
Inflation-adjusted withdrawal
Changing a starting amount by a specified price index/method, not taking a fresh current-balance percentage. Depleted capital can face a rising withdrawal share; personal expenses can diverge from the index.
Longevity risk
Resources proving insufficient because support lasts longer than planned. Average life expectancy is no personal deadline. Couples may need funding until the survivor dies, with changed income/expenses after first death.
Outside income
Spending income independent of capital already counted, such as wages/separate pension entitlements. Use net amounts/dates. Portfolio dividends/interest form part of its return; counting them again overstates resources.
Percentage-of-balance withdrawal
A specified percentage of a defined current portfolio balance. Money amounts fall after losses even if bills stay fixed. The formula establishes neither adequate spending nor complete tax/charge treatment.
Replenishment policy
A refill rule specifying source/timing. Moving investments into a cash bucket changes allocation, not pre-cost/tax wealth. Avoiding sales for today’s bill can still require later refill sales.
Safe withdrawal rate (research)
A rate meeting a study’s success criterion, horizon and assumptions. Avoiding exhaustion may differ from funding household needs. Historical/simulated success guarantees no safety; check assets, spending adjustments, costs and taxes.
Sequence-of-returns risk
Return timing/order undermining a spending plan. Early withdrawal-period losses leave fewer assets for recovery; reordering the same returns can therefore change the final balance when money leaves.
Spending flexibility
Ability to change expenses/timing realistically and promptly. With fixed essentials/outside income, a portfolio-withdrawal cut can demand a much larger percentage cut from adjustable household spending.
Withdrawal horizon
The period capital must support payments, possibly before pensions and beyond average life expectancy. Dates/later needs matter; a study’s convenient endpoint does not determine your funding duration.
Withdrawal rate
A period’s withdrawal divided by specified portfolio value, initial or current. State dates and gross/net basis: the same payment gives different rates with different denominators. It differs from investment yield/return.