In this regard, you have choices. If your employer offers a 401(k) plan, you can sign up and have contributions deducted directly from your paychecks. Currently, 401(k)s max out at $19,500 a year for savers under 50, and $26,000 a year for those 50 and over. Plus, with a 401(k), you may be entitled to an employer match that puts extra money into your account.
If you don't have access to a 401(k), open an IRA. Though IRAs come with lower yearly contribution limits -- $6,000 if you're under 50 and $7,000 if you're 50 or older -- they typically offer a much wider range of investment choices than 401(k)s, so there's that benefit to enjoy.
Now, say you're midway through your career and haven't yet opened a retirement plan. Are you in trouble?
The good news is that you're not -- provided you start playing catch-up immediately. But let's say you're 45 and want to retire at 67, which would actually be your full retirement age for Social Security purposes. If you manage to sock away $500 a month in either a 401(k) or an IRA for the next 22 years, and you invest heavily in stocks so that your money enjoys an 8% average annual return (which is several percentage points below the stock market's average), you'll end up with about $333,000. And if you decide to retire at age 70, you'll be looking at $438,000, assuming that same return and monthly contribution (yes, three more years of saving and investing really can make that much of a difference).