A cartoon man in red lounging in a hammock made of a 100 dollar bill
Retirement accounts for newbies

Signing up for an employer-sponsored retirement plan can be a little daunting for young workers. Merely deciding how much to invest can be a source of anxiety -- after all, keeping up with daily expenditures is hard enough without worrying about remote concepts such as retirement.

But, here's a secret -- it never gets any easier, so it's better just to get started.

Workers in their 20s to whom aging is still relatively hypothetical have the best shot at amassing serious amounts of money with little to no effort.

In just four easy steps youthful wage slaves can effectively begin building up the wealth that will one day liberate them from their oppressive corporate overlords and flimsy cubicle walls and into the free-wheeling world of retirement.

4 easy steps to start your wealth-building machine
It's not rocket science; no genius necessary!

Sign up 
Get the forms and commit to filling them out and then returning them to HR. If your company doesn't do auto-enrollment, then signing up for the plan will be the most difficult part of the entire process. As difficult things go, it's not that hard.

"What you don't want to do is get the packet and think, 'Oh I'll do it later,'" says Marguerita Cheng, a Certified Financial Planner at Ameriprise Financial.

Just do it and get it over with, urges Vincent Barbera, a CFP with TGS Financial Advisors in Radnor, Pa.

"If you have to save, you're a little bit more resistant to doing it because you'd rather spend the money. But when you have it coming out of your paycheck and don't see it, it's easy. The hardest part is establishing the account -- doing the paperwork," he says.

Some plans require a decision straight off the bat by offering a Roth option in addition to the tax-deferred plan.

Barbera says choosing the Roth is no-brainer. "If your company offers that, you can't hesitate, you have to take advantage of that. It is such a huge benefit," says Barbera.


Most retirement plans enable you to save money on a pretax basis or offer an upfront tax deduction, but then you pay taxes upon withdrawal. In Roth 401(k)s and IRAs, you invest after-tax money, and all future earnings grow tax free.

"Up until about age 45, a Roth is most applicable because then you have quite a few years to allow that to work to your benefit because withdrawals are tax-free," he says.

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