Hate Thinking About Retirement? You’ll Like This Story

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OPTION #2: 401(k)
A 401(k) is an investment account that’s fed by pre-tax income taken directly from your paycheck. Some employers will match the funds their employees put in, some won’t. (Cheapskates!) You can often choose how your money is invested — stocks, bonds, money market accounts, mutual funds, etc. — and change where your dough is allocated over time.

Palmer says a 401(k) is “great for the long-term but has to be invested properly — many people make the mistake of being overly conservative with their retirement investments.”

Avoid that pitfall by investing whatever your age is conservatively (like mutual funds), and then putting the remainder into the market. “So if you’re 30 years old, you want 30 percent in conservative investments and 70 percent in the market,” she says.

Wherever you invest, your money should be secure as long as you’re employed. And if you do happen to lose your job, your 401(k) won’t vanish; you just won’t be able to contribute to it until you find another job and roll your 401(k) into your new employer’s plan. There is an option to cash out early, but the fees to do so can be costly. Another option in this case is to consult your bank and ask them about rolling the funds into an IRA.