The FIRE and withdrawal glossary

Every term in this book, and the forum jargon around it, defined in a few sentences, with a pointer to the chapter that covers it. A glossary is something you look things up in, but this one is also meant to be read. Straight through, it works as a summary of the book in alphabetical order. The last section pulls the thirteen numbers that turn up everywhere into one table, so you can check your ballpark at a glance.

A-B§

72(t) (substantially equal periodic payments): the escape hatch that lets you draw from a retirement account before 59 1/2 with no 10% additional tax, by taking a fixed series of payments computed by one of three prescribed methods. The series binds: it must run until the later of five years and age 59 1/2, and breaking it costs the 10% on the current year plus a recapture of every year you avoided it, with interest. Since the calculation runs on the balance of the account you name, the usual practice is to carve out an IRA sized to the payment you want. A good last resort, a poor first choice. US accounts, and the order you drain them

401(k) (and 403(b), 457(b)): the workplace plans, the biggest container most people have. You defer part of your salary into them, traditional deferrals deducted going in and taxed coming out, designated Roth deferrals the reverse, and the employer match is the one guaranteed 100% return in finance. What you pay for that is choice: the plan's menu, at the plan's fees. The governmental 457(b) is the early retiree's favorite, since its limit stacks on top of the 401(k) or 403(b) one and its distributions carry no 10% at any age once you have separated from service. US accounts, and the order you drain them

ABW (amortization based withdrawal): an actuarial withdrawal rule. Each year you pay yourself the amount that would exhaust total wealth (the portfolio plus the discounted value of future flows, minus the bequest you are aiming at) over the remaining horizon, at the current expected return. A mortgage run backwards, recomputed every year. Amortization-based withdrawal (ABW/TPAW): the actuarial approach

All Weather: Ray Dalio's all-weather portfolio. It balances the risk contributions of the four growth x inflation regimes. All-weather portfolios: Browne, All Weather, Golden Butterfly, Dragon

Anarkulova-Cederburg: the work that recomputes the withdrawal rate over a century of developed markets (38 countries). A rigid 4% fails about 17% of the time there. The modern prudent bound. Beyond the United States: Anarkulova, Cederburg and the world sample

Annuity: capital converted into an income paid for as long as you live. Longevity insurance, whose own return comes from mortality credits. Nothing to do with the annuity of a loan schedule, which is the same arithmetic put to a different use. Annuities and safety first: buying a floor

Asset allocation: how the portfolio is split between classes (stocks, bonds, gold and the rest). In the withdrawal phase, a wide plateau (50 to 80% stocks) that drops away on both sides. The stock and bond allocation in retirement

Backwardation / contango: the two possible slopes of a futures curve. Rolling your positions pays in backwardation (distant contracts trade below spot) and costs in contango, which is what dooms naive commodity trackers. Global macro and alternative risk premia: how the big institutions diversify

Barista FIRE: capital covers part of your spending, work you actually want covers the rest. The side benefits of a little income make it worth more than the paycheck alone. What FIRE actually is, Barista, Coast, side income: work you choose

Bend points: the boundaries in the Social Security benefit formula, which replaces 90% of the first slice of your average indexed monthly earnings, 32% of the next and 15% of the rest. Steeply progressive, and cheerful news for a short career: the zeros in the 35-year average pull the average down, but the dollars that survive land where they are replaced at 90 cents instead of 15. A FIRE career therefore gets a smaller benefit and a better replacement rate on what it did earn, which is why the honest number is usually less alarming than the missing years suggest. US health coverage and Social Security: the two ends of the gap

Bengen rule: the fixed withdrawal indexed to inflation. The founding rule (1994), and the yardstick every comparison is measured against. The fixed inflation-adjusted withdrawal (Bengen): the benchmark rule, Bengen, the Trinity study, and the birth of the safe withdrawal rate

Beta slippage: what the daily reset of leverage adds to volatility drag. A daily-reset xL product pays L squared times the index's own drag, not L: four times, for a x2. It cuts both ways, against you in choppy markets, for you in a sustained trend. Arithmetic mean, geometric mean, and volatility drag, Leverage, margin and borrowing against your portfolio (advanced)

Block bootstrap: resampling history by drawing multi-year blocks and gluing them together. Synthetic histories made of real pieces. Historical windows, bootstrap, parametric: the three families of models

Bond tent: raising the bond share as the exit approaches, then bringing it back down through the first decade. A peak of caution over the fragile window. Glide paths: the bond tent, rising equity, and the fragile window

Bracket space: the room left in a low-income year before the next rate applies, and the scarcest resource of the withdrawal phase. Two uses compete for the same budget: a Roth conversion is ordinary income and fills the ladder from the bottom, while a harvested gain fills the 0/15/20 band from the top, and the room cannot be spent twice. Above both sits the net investment income tax, 3.8% on investment income once modified adjusted gross income passes thresholds the statute never indexed. US taxes in the withdrawal phase

Breakeven: the gap between the nominal yield and the real yield. The inflation the market expects. The only forecast with money behind it. Inflation-linked bonds: the only contract written in real terms, Tracking inflation: the indexes, and yours

Bridge (the uncovered phase): the years between your exit and your pensions, when the portfolio funds everything. The real horizon at risk in a FIRE plan. Its length governs how complicated the plan has to be. Horizon, life expectancy, and 50-year retirements

Broad sample: the model that replays a century of 16 developed countries (the JST panel, 1870-2020) in a domestic 60/40. The empirical bound on long-horizon risk. Beyond the United States: Anarkulova, Cederburg and the world sample, Under the hood: how the simulator computes this book

Buckets: cutting wealth into horizons (cash, bonds, stocks). An allocation in disguise, plus a set of flows you still have to write down. Good language, no mechanical value of its own. The bucket strategy: the promise, and the case against it

C-D§

CAPE (the Shiller ratio): price divided by average real earnings over 10 years. The best known predictor of real returns 10 to 15 years out, and therefore of what a starting vintage is in for. Valuations, the CAPE, and what they say about your withdrawal rate

CAPE rule: withdrawal rate = a + b × (1/CAPE), applied to the portfolio as it stands. The percentage rule, made aware of valuations. Self-smoothing, through its double countercyclicality. CAPE-based rules: tying the withdrawal to valuations (ERN)

Carry: the premium you collect by holding what pays carry, funded by what does not (currencies, yield curves, commodities). Documented across every asset class, cyclical, and fragile in a liquidity crisis. Global macro and alternative risk premia: how the big institutions diversify

Cascade (of returns): arithmetic > geometric > real > net > sustainable. Every step costs 0.5 to 1.5 points. The demystification of the 4% rule. Arithmetic mean, geometric mean, and volatility drag

Cash buffer: 18 to 36 months of spending held in cash, drawn on below a written drawdown threshold and refilled in calm weather. Quantitatively neutral, behaviorally precious. The cash buffer: size, cost, and what it is really for, Drawing on a buffer and refilling it: the rules that work

Certainty equivalent: the guaranteed income you would accept in exchange for a risky plan. The universal converter between distributions, and what deflates a pretty average with an ugly tail. Deciding under uncertainty: utility, Kelly, regret, and robust choices

Claiming age: when you start drawing Social Security. Full retirement age is 67 for anyone born in 1960 or later; claiming at 62 cuts the benefit by about 30%, and each year of delay past full retirement age adds 8% until 70, which is the best inflation-linked life annuity an American household can buy. In a couple the decision sets two checks rather than one, since a surviving spouse steps up to roughly the deceased's own benefit, so the higher earner's delay is also insurance for the survivor. US health coverage and Social Security: the two ends of the gap, Annuities and safety first: buying a floor

Coast FIRE: the capital will get there on its own, by compounding. You stop saving and work to cover current spending. What FIRE actually is, Barista, Coast, side income: work you choose

Cohorts, vintages: start dates replayed one by one through history. Bengen's method. The worst American vintage is 1966, not 1929. Bengen, the Trinity study, and the birth of the safe withdrawal rate

CPI-U: the US consumer price index, the standard deflator for real returns and the reference for indexed spending. The euro-area equivalent is the HICP. Tracking inflation: the indexes, and yours

Current withdrawal rate: annual spending divided by the portfolio as it stands today. The main warning light on the dashboard, graded green, amber, red. When to worry, and when to let it ride

Decumulation: the phase where you live off capital. What this book is about, and a different problem from accumulation, because the order of returns starts to matter. Accumulation, transition, withdrawal: the three lives of a FIRE plan

Decumulation frontier: every withdrawal rule plotted as a point in the plane (failure probability against the variability of your standard of living). None wins on both axes at once, so choosing a rule means choosing where you sit along the frontier. Withdrawal strategies: the map before the territory

df (degrees of freedom): the parameter that sets tail thickness in the central model's Student-t. The lower df is, the more often extreme years show up (at df 5, about 10 times more catastrophic years than under a normal distribution). Fat tails, crises, and the Student-t, Under the hood: how the simulator computes this book

Die With Zero: Perkins's thesis. Dying rich is a failure. In its reasonable version: dated time buckets and generosity while you are alive, applied to the surplus of a plan that is already safe. Real spending in retirement (the retirement smile, Die With Zero)

Drawdown: the decline from the last peak, measured in real terms for a retiree. The standard trigger for drawing on the buffer (10 to 20%). Drawing on a buffer and refilling it: the rules that work

Duration: a bond's sensitivity to rates (roughly the percentage it loses per point of rate rise), and the horizon over which its yield is locked in. Bonds in retirement: types, duration, the exact job

E-G§

Embedded gain fraction: the share of a taxable account that is gain rather than the basis you already paid tax on, and therefore the share of any sale that is taxed at all. It starts near zero and climbs with the years, because the gain compounds and the basis does not. It is the friction a plan grosses its spending up by, and since it grows on its own the annual review re-estimates it rather than setting it once. US taxes in the withdrawal phase, How much you need

ERN (Early Retirement Now): Karsten Jeske's blog and its Safe Withdrawal Rate series, more than 60 parts. The modern quantitative reference on the subject. ERN's Safe Withdrawal Rate series: a reader's guide

Expected utility: the criterion that weighs each level of wealth by what it is really worth to you, rather than in raw dollars. Its concavity is where risk aversion comes from, and why a plan gets judged on its 5th percentile plus its median. Deciding under uncertainty: utility, Kelly, regret, and robust choices

Failure probability: the share of simulated futures where the portfolio runs dry before the horizon, under a mechanical rule. A property of the plan and the model together. Read it as a range, and as a ranking. Failure probability: reading it, choosing it, and not letting it run you

Fan chart: the distribution of simulated wealth by date, in percentile bands. A stack of cross-sections, not a bundle of paths. Reading a fan chart without fooling yourself

Financial repression: holding the return paid on savings below inflation for years on end. Historically the way governments prefer to get out of debt. The regime that erodes without ever setting off an alarm. Hyperinflation and extreme scenarios

Fixed percentage: withdrawing w% of the portfolio as it stands. Running out of capital becomes impossible; lifestyle ruin does not. The raw material of the modern rules, to be smoothed (Yale). The fixed percentage of the portfolio: indestructible but uncomfortable

Floor: the budget you can hold for five years, morale included. The plan's real capacity for flexibility. Tested, in a trial quarter, never simply declared. Flexibility: myth and reality (what it can really absorb), How much you need

Fragile window: the first 5 to 10 years of withdrawals, where sequence risk is concentrated. The stretch the buffer, the bond tent and early income exist to protect. Sequence of returns risk: the retiree's real enemy

Gain harvesting, loss harvesting: the two symmetric trades of a taxable account. In a green year with room left in the 0% band you sell appreciated shares, realize the gain at nothing and buy the same fund back the same day, which resets the basis upward; in a red year you sell what is underwater, book the loss and buy something similar but not substantially identical, so the market exposure never leaves the table. Losses offset gains without limit, then a capped slice of ordinary income a year, with the remainder carried forward for good. The two operations never touch the same lot, which is why a portfolio bought over many years is worth more than the sum of its parts. US taxes in the withdrawal phase, Riding out a bear market in retirement: the playbook

Geometric mean: the growth rate you actually compound at. Always below the arithmetic mean, by about σ²/2 (the volatility drag). Your wealth lives in geometric terms. Arithmetic mean, geometric mean, and volatility drag

Glide path: letting the allocation move over time. The withdrawal-phase version (rising equity: lifting the stock share as you come out of the fragile window) is backed by Pfau-Kitces and by ERN. Glide paths: the bond tent, rising equity, and the fragile window

Global macro: funds that bet on the big economic forces (rates, currencies, commodities) rather than on individual securities. Low correlation and good crisis vintages, but enormous dispersion between managers, and the best funds are closed to individuals. Global macro and alternative risk premia: how the big institutions diversify

Golden Butterfly: Browne plus a small-cap value wing. The best SWR-to-drawdown pair in the all-weather family over the sample available. All-weather portfolios: Browne, All Weather, Golden Butterfly, Dragon

Guardrails: a stable withdrawal, adjusted by plus or minus 10% whenever an indicator leaves its corridor. The modern indicator is the re-simulated success probability (Kitces-Tharp, Morningstar). Guyton-Klinger: the original guardrails, their power and their limits, Modern guardrails (Morningstar): the state of the art

H-M§

HSA (health savings account): the only account taxed nowhere. It takes a high-deductible health plan; contributions are deducted, and escape payroll taxes too through an employer's cafeteria plan, growth is untaxed, and withdrawals for qualified medical expenses are untaxed at any age. A distribution can reimburse any qualified expense incurred since the account was opened, with no deadline, so paying today's bill out of pocket and filing the receipt turns it into a compounding medical reserve. At 65 non-medical withdrawals lose the 20% additional tax and become plain ordinary income. US accounts, and the order you drain them, US health coverage and Social Security: the two ends of the gap

Human capital: the present value of future labor income, the implicit bond that you are. Massive when young (hence the glidepaths), reduced for the retiree to the option of going back to work and the pension to come. Lifecycle theory: the academic backbone of the plan, Glide paths: the bond tent, rising equity, and the fragile window

Hysteresis: trigger at one threshold, disarm at a lower one. What keeps every warning light in the plan from crying wolf. When to worry, and when to let it ride

i.i.d. (independent and identically distributed): draws with no memory, each period independent and pulled from the same distribution. Naive Monte Carlo. It under-represents long mediocre stretches (no clustering, no return of valuations toward their mean), which is why the engines with memory exist. Monte Carlo: strengths, weaknesses, and how to use it well, Making a Monte Carlo relevant: blending, regimes, stress

IRA (traditional and Roth): the individual retirement account, in its two flavors, sharing one annual limit. The traditional one deducts going in and taxes every dollar coming out; the Roth does the reverse and, under its ordering rules, lets your own contributions come out at any age with no tax and no 10%, which is what makes it the second rung of a FIRE bridge. Contributing to a Roth phases out with income while converting into one does not, and that asymmetry is the whole of the backdoor. US accounts, and the order you drain them

IRMAA (the Medicare income surcharge): the income-related monthly adjustment added to Medicare Part B and Part D premiums for higher-income beneficiaries. It reads the modified adjusted gross income of two years earlier, and it moves in steps rather than tapering, so the Roth conversion you make at 63 sets the premium you pay at 65. A large conversion program wants to be finished, or sized on purpose, before that clock starts. US health coverage and Social Security: the two ends of the gap

Kelly criterion: the fraction of capital that maximizes the geometric growth of a repeated bet. Brilliant at the casino, unusable as it stands for a retirement (finite horizon, consumption, unknown parameters). What survives is the half-Kelly reflex. Deciding under uncertainty: utility, Kelly, regret, and robust choices

Ladder (bonds, linkers): one rung held to maturity per year of liability. The matching that cancels interest-rate risk, and the contractual version of the bridge to your pensions. Bond ladders (and the ladder of linkers), Inflation-linked bonds: the only contract written in real terms

Lean / Fat FIRE: the frugal variant ($15,000 to $25,000 a year) and the comfortable one ($60,000 and well beyond). The difficulty between the two is not linear. What FIRE actually is

Linkers (inflation-linked bonds): TIPS and their foreign cousins. The only contract written in real terms: inflation, plus a guaranteed real yield. The retiree's conceptual risk-free asset. Inflation-linked bonds: the only contract written in real terms

Long volatility, tail hedging: holding convexity (puts) that pays off in a fast crash, against a premium paid all the time. Negative expectancy by construction, the theoretical complement to trend, and almost impossible to buy cleanly in a fund. Long volatility and tail hedging: paying for crashes

Managed futures, trend: systematic trend-following strategies, long and short, across asset classes. The only defensive holding with a positive expectancy, and the winner of long regimes (2008, 2022). Managed futures and trend following: the diversification that works in a crisis

Market regimes: the persistent seasons that cross growth and inflation. A 60/40 covers two of them. Stagflation is the retiree's nightmare. Market regimes (growth × inflation, sticky bears) and why they matter

Merton share: the lifecycle model's optimal risky fraction, (μ − r)/(γσ²), constant and independent of horizon. For plausible human risk aversions it draws the 50-80% plateau. Lifecycle theory: the academic backbone of the plan, The stock and bond allocation in retirement

Monte Carlo: running the plan through thousands of futures drawn from a model. A conditional theorem ("if the world draws from this urn..."), never a prediction. Monte Carlo: strengths, weaknesses, and how to use it well

Mortality credits: the share of an annuity funded by the deaths of the other policyholders. They grow with age, which is the reason to annuitize late. Annuities and safety first: buying a floor

mu (μ): the annualized real arithmetic mean of the return engine (the location parameter of the Student-t). What you actually compound is about μ − σ²/2. Enter it modest and real, never the average off a brochure. Under the hood: how the simulator computes this book, Arithmetic mean, geometric mean, and volatility drag

O-R§

OMY (one more year): the syndrome of the extra year. Putting the exit off for want of a number that finally feels like enough. The veterans' number one regret. Treated with criteria written in advance, while calm. The one-more-year syndrome

Permanent Portfolio: Browne's four quarters (stocks, long bonds, gold, cash). The all-weather archetype. One winner per regime, rebalanced. All-weather portfolios: Browne, All Weather, Golden Butterfly, Dragon

Portable alpha: the institutional technique that carries a source of return on top of a beta obtained through futures. The ancestor of return stacking. Return stacking, overlays and portable alpha: stacking the premia

Premium tax credit (and the 400% cliff): the subsidy that pays part of a marketplace health plan in the years before Medicare, computed from your modified adjusted gross income against a benchmark silver plan. With the enhanced credits lapsed, eligibility stops dead at 400% of the federal poverty line instead of tapering: one dollar over the line and the whole year's credit is gone, a marginal cost on realized income that no tax schedule in the country comes near. Realized gains, traditional withdrawals and Roth conversions all count toward that income; a Roth distribution and your own returned basis do not. US health coverage and Social Security: the two ends of the gap, US taxes in the withdrawal phase

Qualified dividend: a dividend taxed on the preferential 0/15/20 ladder rather than as ordinary income, which takes a US or qualified foreign payer plus a holding period around the ex-dividend date. Broad US and developed-market stock funds distribute mostly qualified dividends. Interest from bond and money market funds, and most of what a REIT pays out, is ordinary income and climbs the other ladder. US taxes in the withdrawal phase

Quarters of coverage (Social Security credits): the units of work that qualify you, four a year at most, forty in all for a lifetime benefit and for premium-free Medicare Part A. Ten years of earnings, which almost any FIRE career clears without trying. Qualifying is not the same as earning much: the benefit itself runs off your highest 35 years of indexed earnings, zeros included. US health coverage and Social Security: the two ends of the gap

Rebalancing premium (diversification return): the extra geometric return a rebalanced basket of uncorrelated assets earns over the average of its components, roughly half the variance it saves (0.2 to 0.5 points a year is typical). Why diversification works: the mechanics of the free lunch

Retirement smile: the shape of real spending. High at the start, declining for twenty years, rising at the end with health care. A budget built on a constant need over-provisions by 10 to 20%. Real spending in retirement (the retirement smile, Die With Zero)

Return stacking: putting moderate leverage inside funds built for it (90/60, stocks plus trend) so you hold the diversifiers on top of the core instead of in its place. Every stacked layer earns its own return minus cash. Return stacking, overlays and portable alpha: stacking the premia

Risk premium: the wage of risk carried, and the reason any return exists at all. Assets that hurt at the worst moment (stocks) pay. Assets that transfer no risk to anyone (gold, cash) earn nothing in real terms, by construction. Where returns come from: risk premia

RMD (required minimum distribution): the forced annual payout from the pre-tax accounts, from the applicable age of 73 today and 75 for anyone who reaches 74 after 2032. Every dollar is ordinary income, it arrives whether or not you want the money, and it pushes whatever gains you realize that year up the stack. Roth IRAs are exempt during the owner's lifetime, and since 2024 so are designated Roth accounts in a workplace plan. It is the deadline that makes the quiet years before pensions worth spending on conversions. US accounts, and the order you drain them

Roth conversion ladder: converting a slice of traditional money into a Roth IRA each year, paying ordinary income tax on it at a retiree's low rates, and withdrawing that slice five years later with no 10%, whatever your age. Each conversion runs its own five-year clock, so the machine takes five years to start and needs those years funded elsewhere, by the taxable account and by Roth contributions. Once running it delivers one year's spending a year, taxed in the cheapest brackets of your life. US accounts, and the order you drain them

Rule of 55: leave your employer during or after the calendar year you turn 55 and distributions from that employer's plan escape the 10% additional tax (age 50 for qualifying public safety employees in governmental plans). Two conditions get forgotten. It never applies to an IRA, so rolling the plan over on your way out destroys it, and the plan itself has to allow partial distributions rather than one lump sum. US accounts, and the order you drain them

S-Z§

SAFEMAX: the highest withdrawal rate that would have survived every historical vintage (Bengen). About 4% over 30 years in the United States, about 3.25 to 3.5% at FIRE horizons. Bengen, the Trinity study, and the birth of the safe withdrawal rate

Safety-first: the school of liability matching. Guarantee the floor with lifetime income (pension, annuity, ladder), and risk only the comfort layer. Annuities and safety first: buying a floor, Withdrawal strategies: the map before the territory

Sequence risk: once you are withdrawing, the order of returns matters as much as their average. Early losses become permanent. The central concept of this book. Sequence of returns risk: the retiree's real enemy

Sequence stress: the sticky-bears model (Markov, mean-preserving). The gap between it and the central case measures what a bad sequence costs in your plan. Making a Monte Carlo relevant: blending, regimes, stress, Under the hood: how the simulator computes this book

sigma (σ): the annualized volatility of the engine, the standard deviation of its returns. Its σ²/2 drag is what separates the arithmetic mean from the geometric one (the volatility drag). Lower than the one-year vol quoted in brochures. Arithmetic mean, geometric mean, and volatility drag, Fat tails, crises, and the Student-t

Squeeze (the): inflation lifting indexed withdrawals while the nominal portfolio stalls. The mechanism behind the 1966 vintage. Inflation and the withdrawal rate: the exact link

Step-up in basis: property inherited at death takes a basis equal to its market value at the date of death, so a lifetime of accumulated gain is never taxed at all. It makes the oldest and most appreciated lots the ones worth selling last, which is an argument about the order of sales rather than a reason to hoard. US taxes in the withdrawal phase

Stock-bond correlation: the unstable parameter at the center of the allocation. Negative in a disinflationary regime (the cushion), positive in an inflationary one (2022). Bonds in retirement: types, duration, the exact job

Student-t (df): the fat-tailed distribution the central model draws from. df sets how often extreme years occur (at df 5, about 10 times more catastrophic years than under a normal distribution). Fat tails, crises, and the Student-t

SWR (safe withdrawal rate): the "safe" withdrawal rate. Never a constant. A function of the frame around it: horizon, sample, valuations, margins. The 4% rule in ten minutes

Tax lot, specific identification: a lot is one purchase, with its own date and its own basis; specific identification is telling the broker which lots to sell, at the moment you place the order, so you choose the gain the sale shows. Say nothing and the default is first in, first out, which sells your oldest and most appreciated shares. Setting the account's cost basis method once, and checking it, is what makes gain harvesting, loss harvesting and a controlled withdrawal available at all. US taxes in the withdrawal phase, Building it with US-listed ETFs: the retiree's shopping list

Time buckets: dating what you want to do by physiological window (before 60, before 75, and so on). Whatever carries a date gets funded now. The central tool of Die With Zero. Real spending in retirement (the retirement smile, Die With Zero)

TPAW: Total Portfolio Allocation and Withdrawal. The Bogleheads' full ABW. Allocation and withdrawal both computed on total wealth, discounted pensions included. Amortization-based withdrawal (ABW/TPAW): the actuarial approach

Tracking difference: a fund's performance minus its index's. The real measure of what an ETF costs; the expense ratio is only one piece of it. Building it with US-listed ETFs: the retiree's shopping list

Trinity study: the 1998 grid, rate by allocation by horizon, giving the historical success rate. Where the language of failure probability comes from. Bengen, the Trinity study, and the birth of the safe withdrawal rate

Variance risk premium: the persistent gap between implied volatility (the price of insurance) and realized volatility, 2 to 4 points on average. What the buyer of protection overpays, and what the seller collects. Long volatility and tail hedging: paying for crashes

Volatility drag: the σ²/2 drag between the arithmetic and the geometric mean. Volatility is a cost of compounding, even without a crash. Arithmetic mean, geometric mean, and volatility drag

VPW (variable percentage withdrawal): the Bogleheads' percentage that rises with age, an annuity in reverse read off a fixed table. Capital ruin never happens, consumption is deliberate, and the loss tolerance test is mandatory. VPW, the Bogleheads' variable percentage withdrawal

Wash sale: buy a substantially identical security within 30 days before or after selling at a loss and the loss is disallowed. The window spans all your accounts, and a repurchase inside your IRA is the expensive version, since the loss is gone for good and the IRA gets no basis for it either. Nothing in the rule touches a gain, which is why harvesting a gain and buying straight back is allowed. US taxes in the withdrawal phase

The numbers to keep in your head§

Thirteen numbers run through the whole book. Here they are in one place, with the term that carries each one and the chapter that establishes it. Not one of them is new here, and that is exactly the service this table renders. A number in your own plan that looks like none of these deserves an explanation before you keep it.

Going further§

• Any forum term missing from this list is in the Bogleheads wiki or in ERN's own glossary (ERN's Safe Withdrawal Rate series: a reader's guide, The library: sites, papers, books, tools).