Projected Benefit Obligation (PBO): What It Is, How It's Calculated, and What It Means for Investors
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Key terms
- Room and BoardThe combined cost of housing and meal plans at a college or university, which is a significant portion of the overall cost of attendance. Room and board costs vary depending on whether you live on campus, off campus, or at home, and the type of meal plan you select. Many colleges require first-year students to live on campus and purchase a meal plan.
- Defined Benefit PlanA retirement plan where the employer guarantees a specific monthly benefit at retirement based on a formula using salary and years of service. Traditional pensions are the most common type. The employer bears the investment risk.
- Living Below Your MeansA financial philosophy of spending less than you earn, creating a surplus for saving and investing. This habit is the foundation of building wealth over time, regardless of income level. It requires distinguishing needs from wants.
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