A 403(b) is a retirement savings plan available to employees of public schools, nonprofits, and specific religious organizations. It works similarly to a 401(k) but is designed specifically for these sectors. You contribute pre-tax dollars from your paycheck, which reduces your taxable income now, and the money grows tax-deferred until you withdraw it in retirement. Many employers offer matching contributions, which is essentially free money toward your future.

For 2025, you can contribute up to $23,500 annually, with an additional $7,500 catch-up contribution if you're 50 or older. Some 403(b) plans also offer a Roth option, where you contribute after-tax dollars but withdraw tax-free in retirement. If you work in education, healthcare, or the nonprofit sector, your 403(b) is likely one of your most powerful tools for building long-term financial security—especially if your employer matches your contributions.