A good question, answered by our U.S. finance correspondent:

A lot of people ask what happens to their 401k savings when they quit working. The reality is, not many people work in the same job for an entire lifetime. When you quit working, you have some options.

First, you can cash out. This is probably not your best option, but it’s your money. You can have the plan send you a check, and you can spend it as you please. Note that you’ll only get a check for 80% of your money in the plan — the other 20% goes directly to the IRS as a down payment on your taxes. They figure you’ll owe them at least that much. If it turns out you owe less, you may get it back as a refund.

Next, you could leave the money in the 401k plan. Your account balance often has to be above $5,000 to do this, but some smaller employers will let you hang around even if you have a smaller balance. Depending on how much you like the plan, this might be a good option. However, you’re leaving your retirement savings in somebody else’s hands — your former employer’s. They decide which investment company handles the money, and they have to sign off on any distributions from the plan. This can make it tough to get anybody to do anything if you ever want to do something with your money – you have to wait for several people to sign off.

Finally, you can roll your savings over to another similar account. If your new job has a 401k or 403b, these might work. Likewise, you could just roll the money into an IRA, where there will be no employer involved at all. By taking the money with you, you keep control over it. The only drawback to this option is that you actually have to take action and make some decisions on what to do with the money.

Of course, you’ll find that tax laws around these accounts change every day. Therefore, you ought to speak with a tax advisor and get some individualized input on what to do before you make any expensive mistakes.

Continuing our short series of posts from our U.S. finance correspondent, here he comments on employers adding to your 401k:

If your employer offers a match on the dollars you contribute to your 401k, you really need to take advantage of that. There are very few blanket statements that you can make when it comes to personal finance, but this one comes as close as possible: always contribute at least as much as they’ll match. You’d better have a really good reason if you’re not going to contribute that much.

Matching dollars are free money. They’re a way to double your investment in the 401k — that’s not easy to do. To put some numbers into the mix, consider that the S&P 500 has shown long-term (periods greater than 20 or 30 years) average annual returns in the 10% ballpark for most of its history. However, you had to be a risk-taker to get those returns — leaving all of your money in the stock market, going up and down with investor emotions.

Matching dollars do even better: you earn 100% on the amount they match. What’s more, you aren’t taking market risks to do so. It’s a pretty good deal. If you don’t know whether your employer matches, find out – and contribute enough to get the match.

Here’s a trick question: What’s the retirement age in the U.S?

A) 55
B) 59 ½
C) 65
D) 67

Since you knew it was a trick, and I can’t type upside-down, this isn’t much fun. Anyway, the answer is none of the above. You can retire whenever you feel like it. The question is: can you afford to? If you want to retire today, go for it. Best of luck to you…

The numbers above look familiar, right? Where do they come from?

• Age 55 is sometimes the “retirement age” for 401k plans, where you can take money out of the Plan without tax penalties.
• Age 59.5 is the age at which you can start to take money from IRA’s and other accounts without penalty or restriction. There are ways, but it’s tricky.
• Age 65 is when some folks get full Social Security benefits
• Age 67 is when anybody born after 1960 gets full social security benefits

Based on where you will get your income from in retirement, these numbers might help you figure out what your retirement age is.

Here our U.S. finance correspondent discusses tax-deferred growth:

Some investments give you the ability to enjoy tax-deferred growth. A traditional IRA, traditional 401k, 403b, and permanent life insurance all offer this ability. Plenty of other vehicles do as well. What exactly does it mean to have tax-deferred growth? It means that you “defer” (or put off) paying taxes on the gains and income in that account.

Let’s take an example. Suppose that you have $100 in an account. For easy math, let’s say you earn 10% on it during the year. That means you’ll have $110 in your account at the end of the year. If the 10% came as interest or dividends, do you have to pay taxes on it, and how much? The answer: it depends.

In a tax-deferred account, you will not pay taxes on your earnings this year. You can keep the extra $10 in there to continue to grow. Then, you get growth on top of your growth (otherwise known as compounding). Next year, you’ll have a whole $110 in the account that you can earn on.

However, assume that your account was not a tax deferred account. The IRS would say that you owe income taxes on $10 of income. Perhaps you have a hypothetical average tax rate of 25%. In that case, you’d owe $2.50 in taxes by next April! Where does the $2.50 come from? It’s up to you. You could pull it out of the account and leave $107.50 in there for future investment, or you could come up with the $2.50 from somewhere else.

Tax-deferred accounts help you compound money inside the account. There are always tradeoffs. For example, you might have to pay income tax when you take the money back out. Or, you might have to follow certain rules with the money – like leaving it in the account until you reach a certain age.