Workers are increasingly on their own when it comes to providing for their retirement. Pensions are all but unheard of outside of the government or heavily-unionized industries, and both employers and the government have increasingly transferred more and more responsibility to the individual worker. When it comes to employer-sponsored plans like 401(k)s, it is vital for workers, savers and investors (and you should see yourself as all three) to make the most they can out of the plans. While there are some differences with other plans like 403(b)s, most of this advice applies fairly well across the major plans in the United States. (For more, check out Common Questions About Retirement Plans.)
Work Backwards
For folks who have the ambition and the financial wherewithal to truly make the most of their 401(k), one of the best ways to begin is by working backwards. Take your maximum allowable contribution (your 401(k) plan documents should make this number relatively clear, or you can ask for help), divide it by the number of pay periods in a year and see where that leaves you.
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