Retirement Planning Glossary: Key Terms You Need to Know

Retirement Planning Glossary



Retirement is the age by which a person decides not to work for money in life. Retirement age depends on person to person by when they have achieved financial independence.

However, the general retirement age is considered at 60. 

Retirement Planning

Retirement planning is a financial planning for the age of 60 till you die, while you are young. You can even retire early, if you do the retirement planning correctly.


In other words, it’s process to accumulate the money for average 15 – 20 years for your monthly expenditure in existing lifestyle. Compounding effect of small saving is main contributing factor to your retirement fund.

Monthly Contribution Amount


The amount of money you are ready to keep aside for investment on retirement schemes or fund.

Total Year of contribution


The no of years from the date you start monthly contribution till the age of your retirement. You can extend your contribution even beyond 60, if you are starting late.


Rate of Return


It’s the average return, you will get from your invested fund/scheme depending on several market condition and environment. It’s rate at which your money will grow with compounding effect. The average rate of return on retirement fund could be 6% – 8.5%.

Annuity %

Annuity % is the proportion of Toal fund receivable from the scheme which  you want to receive monthly after your retirement. 

Annuity Value

The total amount which will be paid on monthly basis out of the total retirement fund over next 15-20 years of retirement.

Lumpsum Value


The total amount of fund, you want to receive as the one-time at the time of retirement year out of total retirement fund.

Expected Annuity Rate


It’s the rate of return at which your monthly pension fund will be invested again over your retirement period.

Expected Monthly Pension


The final amount of monthly pension after your total retirement fund scheme is divided into Annuity and Lumpsum value and based on rate of return on Annuity.