Financial education for retirement and later-life decisions
Financial Terms Glossary for Seniors
Learn 45 money terms that appear in Social Security, Medicare, retirement accounts, housing, long-term care, estate planning, and financial protection.
A definition cannot make the decision for you. It can help you recognize the rule, document, benefit, cost, or responsibility that deserves a closer look before you act.
What financial terms should seniors and families know?
Start with the words tied to retirement income, health coverage, required withdrawals, home equity, decision-making authority, estate transfer, and financial abuse. These terms can affect monthly income, taxes, healthcare costs, housing choices, access to accounts, and what family members may need to do later.
The glossary is also useful for spouses, adult children, caregivers, and trusted helpers. When a term appears in a benefit notice, insurance policy, retirement statement, loan document, will, or trust, read the full document and verify the rule that applies to the specific situation.
Start with the terms tied to the decision in front of you
These common situations bring several glossary terms together.
Understand where income comes from and how withdrawals work
Start with annuity, COLA, pension, Social Security, RMD, and withdrawal rate.
Separate insurance, benefits, care, and home-equity choices
Review Medicare, Medigap, Medicaid, long-term care insurance, HECM, and reverse mortgage.
Know who can act and how property may pass
Learn beneficiary, durable power of attorney, estate planning, executor, will, and financial abuse.
Find a financial term
Search by a word or phrase such as Social Security, Medigap, power of attorney, or RMD. The glossary filters as you type.
Showing all 45 definitions.
No definitions match that search. Try a shorter word or visit the full Money Fit Financial Glossary.
A-C
9 terms- Annuity
- A contract, usually issued by an insurance company, that can provide income immediately or later for a set period or for life. Fees, guarantees, surrender charges, and payment terms depend on the contract.
- Asset Allocation
- How investments are divided among categories such as stocks, bonds, and cash based on goals, time horizon, and risk tolerance. Asset allocation can help manage risk but cannot prevent losses.
- Assisted Living
- A residential setting that provides housing, meals, personal care, and support with daily activities. Services, staffing, licensing, and costs vary by facility and state.
- Beneficiary
- A person, trust, estate, or organization named to receive money or property from an account, insurance policy, trust, or estate.
- Capital Preservation
- An investment objective focused on limiting loss of principal, usually in exchange for lower growth potential. No investment is completely free of risk.
- Certificate of Deposit (CD)
- A deposit account that generally pays a stated rate for keeping money on deposit for a set term. Early withdrawal may trigger a penalty, and deposit insurance limits and account terms matter.
- Charitable Remainder Trust (CRT)
- An irrevocable trust that can pay income to one or more noncharitable beneficiaries for life or a set term, with the remaining assets going to charity. Legal and tax advice is important before creating one.
- Continuing Care Retirement Community (CCRC)
- A residential community, sometimes called a life plan community, that offers multiple levels of care such as independent living, assisted living, and skilled nursing under a contract. Fees and transfer rules vary.
- Cost of Living Adjustment (COLA)
- An adjustment that may increase Social Security and certain other payments to reflect inflation under program rules. The amount can vary from year to year.
D-F
8 terms- Drawdown
- The planned withdrawal of money from retirement savings or investments to cover expenses. The amount and timing can affect taxes, account longevity, and investment risk.
- Durable Power of Attorney
- A power of attorney that remains effective if the person who created it becomes incapacitated, depending on the document and state law. It can authorize an agent to handle specified financial or legal matters.
- Estate Planning
- Organizing documents, beneficiary designations, property, and decision-making authority for incapacity and death. It may include a will, trust, powers of attorney, and healthcare directives.
- Executor
- The person named in a will and usually appointed by a court to administer an estate, pay valid debts and expenses, and distribute property under the will and state law.
- Fiduciary
- A person or organization required to act in another person's best interest within the scope of the fiduciary relationship. Not every financial professional acts as a fiduciary in every situation.
- Final Expenses
- Costs that arise near or after death, such as funeral or burial expenses, medical bills, legal or administrative costs, and certain outstanding obligations.
- Financial Abuse
- The illegal or improper use of an older adult's money, property, benefits, or identity, often through theft, coercion, deception, or misuse of authority.
- Fixed Income
- Regular income that is generally set by a contract or program, such as a pension or annuity payment. Social Security may change through cost-of-living adjustments, and some income sources can vary.
G-L
10 terms- Grantor
- The person who creates a trust and transfers property to it. The person may also be called the settlor or trustor.
- Gross Estate
- The total value of property and interests included in a person's estate for federal estate-tax purposes before allowed deductions. The calculation can include more than property that passes through probate.
- Guardianship
- A court-created arrangement giving a guardian authority over some personal, medical, or financial decisions for a person the court finds unable to manage them. Scope and terminology vary by state.
- Healthcare Proxy
- A document, or the person appointed by it, that authorizes someone to make healthcare decisions if the individual cannot do so. State terminology and requirements vary.
- Home Equity Conversion Mortgage (HECM)
- An FHA-insured reverse mortgage for eligible homeowners age 62 or older. It allows access to home equity without required monthly principal-and-interest payments while loan obligations are met, and the balance generally grows over time.
- Inflation Risk
- The risk that rising prices will reduce the purchasing power of income, savings, or investment returns.
- Inheritance
- Money, property, or other assets received after someone's death through a will, trust, beneficiary designation, or state law.
- Irrevocable Trust
- A trust that generally cannot be changed or revoked by the person who created it after it becomes effective, except as allowed by the trust terms or law. Legal and tax consequences can be significant.
- Living Trust
- A trust created during a person's lifetime to hold and manage assets. A revocable living trust may help avoid probate for assets properly transferred to it, but it does not replace every estate-planning document.
- Long-Term Care Insurance
- Insurance designed to help pay for qualifying long-term care services, such as care at home, assisted living, or nursing facility care. Benefits, waiting periods, limits, exclusions, and premiums depend on the policy.
M-R
9 terms- Medicaid
- A joint federal-state program that provides health coverage and long-term services and supports to eligible people. Income, resource, coverage, and estate-recovery rules vary by state and eligibility group.
- Medicare
- Federal health insurance for most people age 65 or older and certain younger people with disabilities, End-Stage Renal Disease, or ALS. Coverage, enrollment periods, premiums, and cost sharing depend on the parts and plan chosen.
- Medigap
- Private Medicare Supplement Insurance that helps pay some out-of-pocket costs in Original Medicare, such as copayments, coinsurance, and deductibles. It does not work with Medicare Advantage.
- Minimum Required Distribution (MRD/RMD)
- An older or alternate name for a required minimum distribution. The term most commonly used today is RMD.
- Pension
- A retirement plan, often a defined benefit plan, that pays benefits under the plan's formula and rules, commonly based on pay and years of service. Payment form, funding, and protections vary.
- Power of Attorney (POA)
- A legal document authorizing an agent to act for another person in specified matters. Authority, start and end dates, and whether it continues during incapacity depend on the document and state law.
- Probate
- The court-supervised process for validating a will when required, appointing a personal representative, resolving debts and expenses, and distributing estate property under the will or state law.
- Required Minimum Distribution (RMD)
- The minimum amount an account owner or beneficiary may be required to withdraw annually from certain retirement accounts. Under current federal rules, many owners begin at age 73, but the starting age, account exceptions, and beneficiary rules depend on birth year and circumstances.
- Reverse Mortgage
- A home loan generally available to homeowners age 62 or older that converts part of home equity into loan proceeds. The amount owed usually grows, and borrowers must continue meeting property-tax, insurance, maintenance, and occupancy requirements.
S-Z
9 terms- Simplified Employee Pension (SEP IRA)
- A retirement arrangement that lets an employer, including a self-employed person, make contributions to traditional IRAs established for eligible employees. Contribution and withdrawal rules follow federal tax requirements.
- Social Security
- A federal social insurance program that pays retirement, disability, and survivor benefits to eligible workers and family members based largely on covered earnings and program rules.
- Spousal Benefit (Social Security)
- A Social Security family benefit based on a current or former spouse's work record. At full retirement age, the total benefit can be up to half of the worker's full-retirement-age amount; early claiming and a person's own benefit can change the amount.
- Step-Up in Basis
- A common term for the rule that generally sets the tax basis of inherited property at fair market value on the date of death or another allowed valuation date. The basis can move up or down, and exceptions apply.
- Supplemental Security Income (SSI)
- A federal program that provides monthly payments to older adults and people who are blind or disabled who have little or no income and resources. SSI eligibility is not based on prior work earnings.
- Testamentary Trust
- A trust created under a will that takes effect after death and is administered under the will, trust terms, and applicable law.
- Trustee
- The person or institution responsible for managing trust property and carrying out the trust terms for beneficiaries, subject to fiduciary duties.
- Will
- A legal document stating how probate property should be handled after death and often naming an executor and guardians. State signing rules apply, and some property passes outside the will.
- Withdrawal Rate
- The percentage of an investment or retirement portfolio withdrawn during a year. A chosen rate is a planning assumption, not a guarantee that savings will last.
A familiar term can carry an unfamiliar rule
Required minimum distributions can depend on birth year, account type, retirement status, and beneficiary rules. A Social Security spousal benefit is not automatically half of another person's current check. Medigap works with Original Medicare, and a reverse mortgage leaves property-tax, insurance, maintenance, and occupancy responsibilities in place.
The useful habit is not memorizing every definition. It is recognizing which detail needs to be checked before changing coverage, moving money, signing a legal document, using home equity, or giving another person authority over an account.
Where to check the details
Use official benefit sources, current account documents, and focused Money Fit resources when the decision goes beyond a definition.
Social Security and SSI
Review retirement, family, survivor, disability, and Supplemental Security Income information directly through the Social Security Administration.
Medicare, Medigap, and Medicaid
Check enrollment, coverage, plan, supplement, and eligibility information through the federal program sites and the appropriate state agency.
Investing and retirement guides
Review retirement accounts, basic investment concepts, risk, fees, and warning signs of investment scams.
Reverse mortgage counseling
Learn how independent HECM counseling reviews loan costs, borrower responsibilities, alternatives, spouses, heirs, and the effect on home equity.
Fraud and identity protection
Learn how to spot pressure tactics, protect personal information, respond to suspicious activity, and take steps after identity theft.
Nonprofit credit counseling
When unsecured debt payments compete with housing, healthcare, food, or other essentials, review the budget and possible repayment options with Money Fit.
Explore the Money Fit glossary collection
Financial terms FAQs for seniors
What financial terms should seniors learn first?
Start with the terms tied to current decisions. Common foundations include Social Security, spousal benefit, SSI, Medicare, Medigap, Medicaid, pension, annuity, required minimum distribution, beneficiary, power of attorney, will, trust, reverse mortgage, and financial abuse.
What is the difference between Social Security and SSI?
Social Security retirement, disability, and survivor benefits are based largely on covered work and earnings records. Supplemental Security Income is a separate needs-based program for older adults and people who are blind or disabled who have little or no income and resources. Some people qualify for both.
What is the difference between Medicare, Medicaid, and Medigap?
Medicare is federal health insurance mainly for people age 65 or older and certain younger people. Medicaid is a joint federal-state program with eligibility and coverage rules that vary by state. Medigap is private supplemental insurance that helps pay certain out-of-pocket costs in Original Medicare.
When do required minimum distributions begin?
Under current federal rules, many retirement account owners begin required minimum distributions at age 73. The starting age can depend on birth year, and account type, retirement status, ownership, and beneficiary rules can change the requirement. Review current IRS guidance before taking or delaying a distribution.
Is a HECM the same as a reverse mortgage?
A Home Equity Conversion Mortgage is a type of reverse mortgage insured by the Federal Housing Administration. Not every reverse mortgage is a HECM. HECM borrowers must meet program requirements and continue paying property taxes, homeowners insurance, and other required property charges while maintaining the home as a principal residence.
Are these definitions financial, legal, tax, insurance, or investment advice?
No. The glossary provides general financial education. Benefit rules, tax treatment, legal documents, insurance policies, account terms, state law, and personal circumstances can change how a term applies.
