Employer-sponsored plans like 401(k)s make saving for retirement relatively effortless, and you get some nice additional perks, too.
Once you open your account (the benefits person at your company can show you how to do this), your contributions are automatically deducted from your paycheck. You can change your contribution amount or investing asset allocation, or stop contributing entirely, at any time. When money is magically whisked away from your paycheck before it lands in your checking account, you won’t spend it on something else.
If your employer offers a match on your contributions, don’t pass up the opportunity to contribute enough to get the maximum match. It’s like a reward for being responsible!
Some employer-sponsored accounts allow you to contribute pre-tax income, saving you a considerable amount on your tax bill for the year.
Retirement accounts generally have contribution limits determined by the IRS, but employer-sponsored accounts generally have higher contribution limits than many individual retirement accounts. For example, you can contribute up to $18,500 to a 401(k) -- not including a company match — but only $5,550 to an IRA.