Your grandparents—and even some of your parents—had it pretty easy when it came to saving for retirement. Back then, not only was Social Security a reliable source of retirement income, but many employers offered Mom or Dad a defined benefit pension plan as well. It was a nice company perk, primarily funded by the employer, which promised to pay retirees a steady “paycheck” for the rest of their lives.

Today, about half of Generation X and Millennials believe they would receive no Social Security benefits by the time they retire, according to a Pew Research Center survey. In addition, less than one in five companies continue to offer employer-funded pension plans. Instead employers are more likely to offer 401(k) plans as a way to help employees sock away money for the future. While some companies may offer auto-enrollment—meaning you have to opt out if you don’t want to participate, many require you to proactively sign up for the plan.

Either way, your mission is clear: Participate in your employer’s 401(k) plan as soon as your company allows—and stay the course. Your future comfort and security rests almost solely on your ability to save during your working years.

You Are in Charge

Conventional wisdom says you should aim to replace 65% to 90% of your current income to maintain your lifestyle once you retire. For example, if you make $50,000 per year today, you may need anywhere from $32,500 to $45,000 (in today’s dollars) to make ends meet in retirement. Keep in mind that Social Security may not be enough, as it may only replace about 40% of your current income.

To augment your Social Security benefits, there is no getting around saving aggressively throughout your working years. That’s where your 401(k) comes into play. It allows you to invest for your future, while taking advantage of the income tax savings, employer match, and long-term compounded growth of your wealth.

Let’s take a look at all three of these important benefits.

1. Reduce your tax burden today
   Because you make contributions to a traditional 401(k) on a pretax basis, they essentially lower your taxable income. For example, if you make $50,000 per year and contribute $3,000 to your 401(k), you will owe taxes on $47,000 instead of on $50,000. Of course, there is a catch. You will owe taxes when you withdraw your 401(k) money upon reaching retirement age, but theoretically your tax bracket will be lower than it is today.

2. Grow your wealth with “free” money from your employer
   One of the key benefits to this effective savings tool—and a major contributing factor toward you reaching your retirement goals faster—is a possible employer match. That is, many employers will match part or all of your 401(k) contributions. For example, if you contribute 3% of your annual salary to your 401(k) account, and your employer matches up to 3%, it’s like getting a “buy one, get one free” in your retirement account. If you don’t contribute at least as much as your employer’s match, you are leaving money on the table.

3. Time is your best friend when saving for your retirement
   Of course, the earlier you start saving, the greater your chances will be of reaching your retirement goal. Plus, the longer you invest, the less impact you will feel from any short-term volatility in your portfolio. Women in particular, who often leave the workforce for a while to care for their families, should participate in their 401(k) plans for as long as possible to enjoy the benefits of compounded growth over time.

   Whatever you do, avoid touching your 401(k) money before you reach retirement age unless you are facing an extreme emergency. Not only will you dampen your chances of having a comfortable retirement, you’ll have to pay some hefty penalties and taxes as well. If you change jobs, either keep the money in your current 401(k), roll it over into your new one, or roll it over into an IRA.

Beware of the Cash Trap

Despite these hard-to-pass-up benefits of 401(k) plans, some workers—especially women—tend to fear investing of any sort, often because they lack confidence in their investment know-how. If you decide to “play it safe” and keep your money in savings accounts, money market accounts and certificate of deposits (CDs), you may miss out on the significant capital appreciation historically provided by stocks and bonds.

While short-term investments play an important role in your overall financial strategy, they aren’t designed to grow your wealth over time. Your money likely won’t keep up with inflation when it is sitting in cash. By recognizing and overcoming your financial insecurity, you can avoid the common money pitfall of investing too conservatively.

One Final Note

If you can afford to “max out” your 401(k) contributions, do it. The maximum amount you can put into a 401(k) in 2016 is $18,000. If you are age 50 or older, you can contribute an additional $6,000. With time on your side, the “freebie” employer match and tax benefits, investing in your 401(k) matters a lot. You don’t want to miss out on your chance to get that steady paycheck in your retirement years—just like Grandpa. If you're not sure where to begin, help is available at Jemma Financial.