401(k)
The most common way Americans save for retirement isn’t a choice you research and pick — it’s a benefit sitting in your employee handbook, often with free money attached if you know to claim it.
What Is It
A 401(k) is an employer-sponsored retirement account that lets you contribute part of your paycheck before it’s taxed, reducing your taxable income today while the money grows tax-deferred until you withdraw it in retirement. Many employers also match a portion of what you contribute — effectively free money, but only if you contribute enough to claim the full match.
Why It Matters
For 2026, you can contribute up to $24,500 of your own paycheck, with an extra $8,000 allowed if you’re 50 or older ($11,250 instead, for those turning 60–63 this year). Employer matching is the single most overlooked part of most people’s compensation — not contributing enough to get the full match is effectively turning down a raise.
Quick Example
Say your employer matches 100% of your contributions up to 4% of your $60,000 salary. Contributing just 4% ($2,400/year) gets you a matching $2,400 from your employer — instantly doubling that portion of your contribution before it’s even invested. Contribute less than 4%, and you leave part of that match on the table permanently.
Put numbers to it — here’s how that match compounds over time across different contribution rates and match structures.
Try It Yourself
See how your own contributions — plus any employer match — grow into your actual retirement number.
↗ retiresmart.borrowingbetter.com 🔥RetireSmart — Retirement Calculator
Model your own contribution rate, employer match, and timeline to see your actual retirement projection.