Retirement planning can be daunting for younger individuals who are trying to balance the importance of saving for the future with the in-the-moment expenses they are facing such as raising children or buying their first house. Traditional IRAs can be intimidating because the money invested seems to be locked away for many years into the future, and often do not provide flexibility for unexpected financial needs earlier in life, but many options exist for younger investors to start saving for retirement. If an employer offers a 401(k) plan with matching contributions, younger individuals can participate up to the matching amount to fully take advantage of employer contributions, and then make further contributions with a Roth IRA, which allows more flexibility in withdrawing contributed funds before reaching retirement. Another option is for younger individuals to look into whether their employer-sponsored 401(k) plan allows them to borrow from their 401(k) account, which may also address the common fear of tying up funds that may be suddenly needed.
See Natalie Choate, Retirement Plans for Young People: Know Your Choices, Morning Star, Jan. 18, 2015.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.
