Whether it's your first time working for an employer that sponsors a retirement plan, or you've gotten a different job, having access to a 401(k) means you have a solid opportunity to sock away money for your golden years. That said, you'll need to make some important decisions with regard to that account, and here are three big ones to contemplate.

1. How much of my salary should I contribute?

For the current year, you can contribute up to $19,000 to your 401(k) if you're under 50, or up to $25,000 if you're 50 or older. Most people, however, can't manage to part with that much cash, so if you're one of them, worry not. What you should do, however, is work out a budget and figure out how much of your salary you can afford to part with. If you guess at that number, you might overfund your account and start falling behind on your bills (though the good thing about 401(k)s is that you can generally change your contribution amount easily -- it may just take a couple of pay cycles to go through). But you don't want to contribute too little, either, because if you do, you'll risk falling short on funds later in life.

Man holding up white card with 401K written on it in red letters


One thing to keep in mind when making this particular decision is your company's matching policy. Many employers match 401(k) contributions made by employees to varying degrees, and that's something you want to capitalize on, as it's effectively free money. Therefore, see how much you'll need to put into your 401(k) to get your full match, and aim to hit that target. For example, if your employer will match up to 3% of your salary, and you earn $50,000, make sure to contribute a minimum of $1,500 to your 401(k).

2. How should I invest my money?

The money in your 401(k) shouldn't just sit there doing nothing; you'll be tasked with investing it so that it grows. You typically can't buy individual stocks and bonds with a 401(k). Rather, you'll need to put your money into stock or bond funds which generally fall into two categories: actively managed mutual funds, and index funds.

The benefit of actively managed funds is that you get to capitalize on the expertise of the people who run them. But, you'll pay higher investment fees to get a piece of that action. Index funds, on the other hand, simply track existing market indexes and are passively managed. As such, their fees are much lower. This isn't to say that actively managed mutual funds don't have a place in your 401(k). Just make sure you're aware of the fees involved.

Additionally, make certain the funds you choose align with your investment strategy and appetite for risk. If you load up on too many bond funds, you'll usually limit your returns. The result? Less money for you in retirement. Stock-focused funds are generally more volatile, but typically offer higher returns, so you'll need to take those factors into account when setting up your portfolio.

3. How often should I check my balance?

You may be tempted to check up on your 401(k) frequently. After all, the money sitting in that account is your hard-earned cash (plus whatever funds your employer contributes), and you want to make sure it's growing. But remember, saving for retirement is a decades-long process, and if you check your account balance weekly, you may very well end up driving yourself crazy. If the market has a tough couple of days, you could see your account balance plummet overnight, but chances are, that loss will only be temporary.

That said, it is a good idea to check on your 401(k) investments periodically to make sure they're performing as expected and meeting your needs. You may therefore want to make a calendar note to review your 401(k) quarterly or semiannually.

The right 401(k) decisions will help you make the most of your retirement plan. And you know what that means -- more money for you when your golden years eventually roll around.