Retirement account - Financial definition

Retirement accounts serve as vehicles for individuals to set aside money during their working years to support themselves financially after they retire. These accounts often come with tax advantages, such as tax-deferred growth or tax-free withdrawals in retirement, incentivizing individuals to save for their future. Common types of retirement accounts include 401(k)s or IRAs (Individual Retirement Accounts) in the United States, and pension plans.

They typically offer a range of investment options, allowing account holders to customize their portfolios based on their risk tolerance and retirement goals. Additionally, many employers offer employer-sponsored retirement plans, contributing to employees' retirement savings through matching contributions or profit-sharing arrangements, further enhancing the retirement savings process.