With the fate of social security up in the air and pension plans evaporating, the burden of funding retirement is shifting from employers to workers. With fewer long-term guarantees and people saving less than in prior generations , it’s up to you to ensure your nest egg grows until you need it.

The good news is that employers are still offering what could be the best retirement vehicle out there: a 401(k) plan. Even if your new job doesn’t offer a 401(k), there are other ways to invest on your own with similar perks so you can meet your retirement needs.

Benefits of Investing in a 401(k)

• Tax deductible contributions. The money you contribute is tax-deductible. So if you pay 30 percent in federal and state income tax, you’ll save 30 cents in taxes for every dollar you stash in your 401(k).
• Tax-deferred growth. Your money grows tax deferred, so you’re not taxed until you start withdrawing money in your retirement, when your tax bracket is typically lower.
• Free money. You read it right – the real beauty of a 401(k) plan is that employers match contributions to the plans. So fifty cents for every dollar you contribute earns you a 50 percent return on your investment. The amount employers will match can vary, but you’ll miss out if you decide not to contribute.

Get the most out of your 401(k) investment

Contribute to the max. The IRS allows a maximum contribution of $15,500 each year (though your employer may set a lower limit), so throw in every penny you can. If committing to the maximum amount feels too daunting, ease in by contributing the full employer matching amount and kick up your contribution by 1 percent each quarter.

Invest with your retirement needs in mind. Another benefit of 401(k)s is the variety of investments offered, from conservative to aggressive. While keeping your timeline and risk tolerance in mind, be sure to diversify enough to protect your overall contributions. If your employer offers company stock as an investment option, don’t buy more than 10 percent of your total investment.

No 401(k)? Throw Your Own Retirement Savings Party

If your employer doesn’t offer a 401(k), instead of crying in your soup or ditching an otherwise great gig, set up your own tax-deferred investment vehicle: an individual retirement account, or IRA.

Here’s how:

Step 1. Choose your flavor. There are two types of IRA accounts:

Traditional IRA: a tax deferred individual savings plan. Depending on your income, you can deduct your contributions.

Roth IRA: an individual savings plan that allows your investments to grow tax-free for good. They are subject to certain income limits, so ask your tax advisor if this is a good vehicle for you before signing up.

The contribution limit for both the traditional and Roth IRA for 2008 is $5,000 (or $6,000 if you’re age 50 or over).

Step 2. Behave like a 401(k). 401(k) plan contributions are deposited into an account each month, an investment method known as dollar-cost averaging. By investing a set amount on a regular basis over time, you’re less vulnerable to the whims of market volatility while boosting your returns over the long run. It’s simple to fund your IRA this way—simply have a set amount automatically transferred from your bank account to your IRA each month.

Step 3. Reinvest your earnings. Be sure to reinvest all earnings—interest and dividends—on your investments back into your account. This is how 401(k) plans work and it’s why they’re so popular and successful. This is crucial, because over the long term, the bulk of your retirement savings doesn’t come from your initial investments, but rather from the returns on those investments.