Oct 19, 2025

401(k)

• A 401(k) is a retirement savings account that’s offered through your job. It lets you save part of your paycheck before taxes are taken out. Meaning you pay less tax now, and the money grows until you retire.

How do I remember it?

• Think of it like this, “401(k) = Job + Retirement Piggy Bank.”

• Your employer sets it up → you put a percentage of your paycheck into it → it grows for the future.

Real world example

• Let’s say you work at a company 

You earn $3,000 per month.

You decide to put 10% ($300) into your 401(k).

Your employer matches 50% of what you put in (up to a limit).

→ So they add $150 more each month for free.

Now, instead of being taxed on $3,000, you’re only taxed on $2,700, and $450 total ($300 from you + $150 from them) goes straight into your retirement account. It will then grow, and is often invested in stocks or mutual funds!