Retirement accounts such as 401(k)s are called ‘defined contribution plans’ because employees elect how much to contribute. If your employer offers this retirement savings option don't pass it up! Start contributing as much as you can afford, as soon as possible. Depending on where you work you'll hear this type of plan referred to as Each allows you to make pre-tax contributions to your retirement. Many employers make matching contributions up to a certain percentage or dollar amount of what you put in. That's free money for you! By choosing to invest in this type of plan you are currently allowed to contribute up to $17,500 if you are under age 50 and up to $23,000 if your are 50 or older. And the good news is that this money is deducted from your income before taxes are taken out. Once you decide to retire, however your plan money will be taxed as income based on how much you withdraw each year. Depending on where you work, your employer is likely to offer a list of investment options for you to choose from usually in the form of mutual funds with different investment mixes and degrees of risk. Keep in mind that these plans are voluntary so there's nothing there for retirement unless you put money in. And there is no guarantee of a specific amount you’ll have at retirement - that depends on how much you contribute and how well the investments you select do over time. And since it's likely you'll change jobs sometime in your career be sure to ask what your options are if you leave your job prior to retirement. Contribute early and often to your retirement plan stay informed and don't hesitate to ask a financial advisor for guidance. These things will help put you and your money in the best position to enjoy a comfortable retirement.