Congrats—you have a new job! Now you need to thumb through that huge new employee benefits packet. One of the more confusing elements is the 401K and retirement savings. We asked finance experts to break them down for us.
What is a 401(k)?
A 401K is an employer-sponsored retirement savings account, and it’s one of the smartest ways to save for your golden years. The account allows employees to invest tax-free and accumulate earnings, says Kate Stalter, Senior Financial Advisor at Better Money Decisions in Albuquerque, New Mexico. “A 401(k) is a good deal because employees can invest before taxes are taken. However, at a later date, when the employee withdraws his or her money, taxes are taken.”
How much should I contribute?