The 401(k) account is one of the most common retirement savings accounts that employers offer their workers. Employees are able to contribute pre-tax dollars to these accounts and invest them tax-deferred. Only when withdrawals are made do the account holders pay taxes at their ordinary tax rate.
Employers have the option to offer some kind of matching contribution, usually up to a set percentage of each employee’s salary. Employer contributions are deductible up to a certain point.
With everyone making different salaries and employers having different policies for their 401(k) plans, it’s natural for workers to wonder how much they should save as they approach retirement. While there is no single right answer, available data can help you gauge where you stand.