Young adults entering the work force in their 20s and 30s should lay a foundation for their retirement. I know it is not going to get the attention of many, but if I can reach one, I’ll take that as a success. Here’s why.
One good reason to start early is compounding effect. If you can start saving for your golden years at an early age, you have all that time ahead of you to stack up big money. Start with as much as you can put away for your retirement. One of the biggest advantages in saving for golden days is time. Your small investment over time will compound without you even noticing.
Many employers are matching your contribution to 401(k), 457 and other retirement plans. It is free money for you. Aim to get the maximum of your employer’s match. Some employers may even calculate taxes on your pay check for the balance after deducting your contributions to your retirement plan. After you contribute the maximum to your retirement plan and you can spare few more dollars, consider opening a Roth IRA. Contributions are not tax free but when you withdraw from it, meeting all withdrawal requirements, it will be tax free.