A defined contribution plan is a type of retirement savings plan where both employees and employers can contribute a specific amount of money regularly. The contributions are typically invested in various financial instruments, and the final retirement benefit depends on the total contributions made and the investment performance over time. Common examples include 401(k) plans and 403(b) plans. Unlike defined benefit plans, which guarantee a specific payout at retirement, defined contribution plans do not promise a set amount. Instead, the risk of investment performance falls on the employee, making it essential for individuals to manage their investments wisely to secure their financial future.