A 401(k) turns part of every paycheck into retirement savings — often with free money from your employer's match.
A common match is 50% of your contributions up to 6% of salary. On $80,000 that is up to $2,400 of free money per year.
For 2026 the employee elective-deferral limit is $24,500 (under age 50). Employer contributions have a separate, higher total limit.
Traditional 401(k) contributions are pre-tax: they reduce taxable income now, so federal and state withholding drop and take-home falls by less than you contribute.