Money Save Retirement Put Ways Employee Person Investing

In the United States, there are many ways to invest money, especially to save for "retirement" (the period of time late in one's life when one no longer works). Some of these investments are for individuals, and others are "employer-sponsored" (the employer provides some or all of the money) "retirement plans" (organized ways to save money for retirement).

One of the most common ways to save for retirement is to put money into a 401(k). An employee can choose to put part of his or her "salary" (the money that a person makes by working in a job) into a 401(k) investment account each month. That employee does not have to pay any taxes on the money in that account until it is "withdrawn" (taken out of an account) years later, when he or she is ready to retire. Most employers "match" some or all of the employee's "contributions" (the amount of money that one puts into an account). This means that if an employee puts in 200 dollars each month, the company where he or she works might put in 50 percent or 100 percent of that amount.

An Individual Retirement Account, commonly known as an IRA, is a way for a single person to save for retirement, with or without an employer's assistance. As with the 401(k), money put into an IRA is "tax-deferred," meaning that the investor does not have to pay taxes on that money until it is withdrawn years later.

Finally, a "pension" is an arrangement for a certain amount of money to be given to a retired person every month by his or her "former" (previous) employer. Pensions provide a "steady" (reliable and unchanging) retirement "income" (money that one receives), but they generally do not provide as much money as 401(k) retirement plans or IRAs do.