The key is to make a plan -- right away when you are still young and stick to it!  Whatever you decide, make it automatic so that your retirement accounts get paid before you do.  In addition to your official retirement account (hopefully, you'll have a nice one where you work), you should plan on saving 10% of your income on top of that.  If you can't do 10% right away, start with 1% for a few months, then go up to 2% for a few months and so on.   Keep working your way up and soon you won't even miss the saved money.

Here are some of the main types of official retirement accounts:

Here's how it works:  Each time you get paid, a set amount (that you'll decide on and tell your employer) will be taken out of your paycheck BEFORE it is taxed by the IRS.

Let's say your paycheck is for $10,000 and you contribute $1000 to your 401K...  The IRS will then just tax the remaining $9000.

The money you put into your 401K will get invested in mutual funds and bonds (your company will have a list of things you can invest in).  The cool thing is that you won't have to pay any taxes on the interest your 401K account makes.  The bad thing is that you can't take any money out of your 401K (without a penalty and without having to pay taxes on it) until you are 59 1/2 years old.  You'll pay taxes when you start making withdrawals out of the account...  But, you'll be making less money then and will have to pay a lower percent in taxes.

If you leave your job before you retire, DO NOT CASH OUT YOUR 401K!!!  This is one of the dumbest financial moves people make.  Why?  Because of how that wonderful compound interest works.  Not only will you get hit with a 10% penalty, you'll have to pay taxes on the chunk you take out.  And you'll lose those years of compounding!  When you leave one job, you'll be able to transfer (rollover) the 401K to your new job.  You have to let them do the transferring though...  That money can never touch your hands or your other accounts.  It's not like the 5 second rule when a cookie hits the floor.  When that money hits you, penalties and taxes hit you!  Statistics show that most people change major jobs in their late 20's and most of them make this mistake.  Don't let it happen to you.

Also, NEVER TAKE OUT A LOAN FROM YOUR 401K!  Here's the deal on why:  The money you originally put into that 401K was PRE-TAX money... When you pay it back, you'll be paying it back with money that has been taxed... Then, when you're retirement age and take the money out, you'll get taxed on it...  That's double taxation and NOT a very smart thing to do!

Some confusing terminology:

A "transfer" is when you are still with the same employer, but you want to change the company that holds your 401K account.  (Like changing from Fidelity to Vanguard.)

A "rollover" is when you are changing jobs and you want your new employer to continue to make deposits into your existing account.

The IRA Account:
IRA stands for individual retirement account.  The idea is a lot like 401K's and 403B's... 

• You put the money in before it's taxed (it's pre-tax income).
• The money is invested in stuff like mutual funds and bonds.
• You don't have to pay taxes on the interest you earn until you retire.
• You don't have to pay taxes on the interest, dividends or gains you make on the investments.
• You pay taxes when you start to make withdrawals out of the account (starting at age 59 1/2 or later).  The idea is that, by this time, you'll be making less money and will be in a lower tax bracket.  (You'll pay a lower percent in taxes.)
• There are penalties and taxes for early withdrawal.
• You can transfer it (or "roll it over"), but you can't touch it.

The current (2005-2007) limit is $2000 a year.  One little note:  If you make a lot of money, you won't be able to do an IRA as a tax-deductible thing...  This just means that, if you make $200,000 a year and contribute $2000 to you IRA, you'll still get taxed on $200,000...  So, you'll want to do this next type:

The Roth IRA Account:
This is the same as a regular IRA except that you pay taxes on the money BEFORE you put it in the account and not after.  Roth IRA's are the new and hip thing in the financial world.

There are several other kinds of retirement accounts for small businesses and for self-employed people.  If this is you, definitely look into these options.  Just because you are self-employed, it doesn't mean you can't set up an official plan...  The SEP IRA might do the trick.