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Pension Benefit 1: Using Pretax Money Means an Instant 25 Percent Accelerator: Retirement accounts offer you a deal: You promise to invest your money for the long term, and in exchange they give you huge tax advantages. Because the money you're contributing isn't taxed until you withdraw it many years later (this is called "pretax money"), you have much more money to invest for compound growth--usually 25 to 40 percent more (although this could change for some higher earners in 2010).

Some wealth planners say that you should aim to have at least the equivalent of your annual salary saved for retirement by the time you are thirty, three times that sum by the time you are forty, eight times by the time you are sixty, ten times by retirement, in order to maintain your standard of living. Someone used to all the perks of a PS100,000 salary would need to have at least PS1 million saved to not feel poorer in retirement.

Rung 1: If your employer offers a pension scheme where they will match your contributions, invest to take full advantage of it. If it's a final salary scheme (sometimes called defined benefit), your employer will pay in a lot more than your own contributions. If not, find out how much you should contribute to get the maximum contribution from your employer. If you earn PS40,000 and your employer offers a 100 percent match up to 5 percent of your salary, if you pay in PS150 a month, your company will match it. This is free money and there is, quite simply, no better deal.

You can't touch this pot until you are fifty-five. At that age you are free to do a variety of things with it: take out all of it, though this is inadvisable, as it will be taxed heavily; take out a bit of it at a time or take out a quarter of the whole pot, on which you will not pay tax, leaving the rest invested to hopefully grow.

At its most simple therefore, a private pension is really just a tax break, or what is known as a tax 'wrapper' - a bit of jargon meaning something you wrap around a variety of different products to protect it from tax. The product is most commonly an investment fund, where your money (hopefully) grows by investing it in the stock market, but you can hold other things in a pension, like cash, or commercial property.

You can find old pensions you have lost track of using the government's pension-tracing service (gov.uk/find-pension-contact-details), a database of contact details for past and present pension schemes.

If your employer offers a defined contribution pension scheme, find out how much your employer will contribute and how much you need to pay into the scheme in order for them to match you at maximum levels,

Remember, knowing how to invest isn't obvious. And that's the problem. When it comes to money, it's actually very easy to end up like most other people: You just... do nothing.