Definition of the Term "Retirement Fund"

Depending on the context in which it is used, the term "retirement fund" can refer to many different things. It may refer to an individual's own retirement savings, money set aside by an employer to satisfy pension or 401k contributions, or mutual funds designed specifically for investors, whose goal is retirement.

Retirement Savings

All of the assets you have accumulated specifically for retirement, whether those funds are inside retirement accounts or other, taxable accounts, are often called a "retirement fund." Examples of such assets can include savings accounts, certificates of deposit, stocks, bonds, mutual funds, options, annuities and real estate among other assets.

Retirement Account

Roth or Traditional 401k, 403b or IRA account are examples of retirement accounts. Employers often offer employees a certain amount of money as a direct contribution to the employee's 401k. This amount is usually a fixed percentage of the employee's salary and is only contributed to an employee's retirement account if the employee automatically contributes a certain percentage of her salary to her retirement account. Employers offer this matching contribution to encourage employees to save for retirement.

Defined Benefit Pension Plan

A defined benefit pension plan, or pension plan, is an employer-directed retirement fund, in which eligible employees are entitled to a certain annual payout upon reaching retirement age. Eligibility and pension payout amounts are largely dependent on the number of years an employee has worked at the firm, the employee's pay at retirement, and the employee's age at retirement, among other relevant factors. Employers may require employees to contribute a certain amount of their paycheck towards the pension plan or they may not. Regardless, the payout amount is not based on the investment returns of the pension plan as they are in defined contribution plans such as 401ks; returns are based on a fixed formula.

In this instance, "retirement fund" generally refers to the assets used to pay employee pension benefits in a defined-benefit pension plan. It may also refer to the monthly payout amount.

Retirement Mutual Funds

The phrase "retirement fund" can also refer to mutual funds specifically designed for investors saving for retirement, such as a target retirement fund.

Target Retirement Funds

Target retirement funds are mutual funds that gradually shift assets from aggressive (such as stocks) to conservative (such as bonds) as a "target date" approaches. The target date is a year in which or near which investors in the fund may retire. If a target retirement fund's target date is 2050, the portfolio manager of the fund will gradually shift assets from aggressive assets to conservative assets until the majority of the assets are in conservative investments in some predetermined ratio by 2050.