401(k) and IRA Accounts
01.The Workplace Retirement Fund
A 401(k) is a special retirement plan offered by employers. When you save money in a 401(k), it comes directly out of your paycheck before taxes, which lowers your tax bill today. The money grows tax-free until you retire!
02.The Employer Match: Free Money!
Many companies offer a '401(k) match.' This means if you save $100 in your 401(k), your employer will also put $100 into your account for free! It is literally free money, and it is the best bonus any worker can get.
03.IRAs: Individual Accounts
If you don't have a 401(k) at work, you can open an Individual Retirement Account (IRA) at a bank. Both 401(k)s and IRAs have special rules: you cannot withdraw the money until age 59 and a half without paying a penalty. This locks in your retirement savings!