A 401(k) is an employer-sponsored retirement savings account that allows employees to defer a portion of their salary into investments, typically reducing taxable income. Contributions can grow tax-deferred, leading to significant savings over time thanks to compounded interest. Some employers enhance this benefit by offering matching contributions up to a certain percentage, further increasing retirement savings potential. Despite their popularity, many Americans lack a full understanding of how 401(k)s work and the long-term advantages they provide for building wealth.
401(k)s are employer-sponsored retirement investment accounts that allow employees to set aside a portion of their paycheck, reducing taxable income while funds grow tax-deferred.
Many Americans are unaware of the potential savings and wealth accumulation through compound interest over time in a 401(k), highlighting the importance of understanding its benefits.
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