Why is a 401(k) so powerful?

A 401(k) is one of the best ways to save for retirement because of two main factors: tax advantages and employer matching.

1. Free Money (Employer Match)

If your employer offers a "match," you should always contribute at least enough to get the full match. For example, if they match 3% of your salary, contributing 3% actually puts 6% into your account instantly. That's a guaranteed 100% return on investment!

2. Compound Interest

The earlier you start, the less you have to save. Your money earns interest, and then that interest earns more interest. Over 30 years, the interest often exceeds the amount you actually contributed.