Retirement accounts for newbies

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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
How much
Figure out how much to contribute, and avoid the extremes of putting in too little or too much.

“The first thing they ask when you’re signing up is, ‘How much you would like to contribute to your 401(k) plan?’ And a lot of people start out too low. They say ‘I don’t want this to compromise my net income, so let’s go 1 percent or 2 percent,'” says Vincent Barbera, a financial planner with TGS Financial Advisors in Radnor, Pa.

On the other hand, overzealous savers can end up contributing more than they really need to and tying up money that may be better used on the present.

“If you get a younger person in their 20s and they start plunking down $15,500 a year with the employer match (the maximum allowed by law), they have a good chance of dying with about $20 million in the bank. And you don’t really want to do that,” says Frank Boucher, a Certified Financial Planner in Reston, Va.

Instead of feeling inadequate for being unable to contribute even near the maximum allowed or tossing in a tiny percentage of your income, at least put in just enough to get the match offered by the company.

“You don’t want to leave that money on the table,” says Boucher. “And then you can slowly work yourself up to about 10 percent of your income by increasing your contributions when you get a salary increase. Take a portion of that (raise) and put it in the 401(k) plan, and then use the rest to go out and spend.”