I have a confession to make: I’ve become slightly obsessed with saving for my retirement. My Roth IRA is just four months old, but already I’ve come to think of it as my trusty piggy bank. I picture the change I throw its way piling up for my “golden years”—days I might spend taking cruises around the globe, knitting scarves, and playing tennis in the park…
What about this Roth IRA love is so worthy of sharing with you all, you might ask? My retirement saving is perhaps a little more unusual than it sounds…given that I’m only twenty. Having barely left my teenage years, why am I already thinking about the far-off future?
Cheesy as it may sound, it’s truly never too early to start saving for your retirement. In fact, the earlier you start, the more painless it is to put aside a decent amount of money on a regular basis. It’s a habit I’m trying to adopt early, before I get into a different habit of taking my extra spending money straight to Barneys.
I was convinced that opening a Roth IRA now made sense for me after playing around with some retirement calculators. After entering figures into these calculators, I could actually visualize that by putting in a set amount each month and increasing that amount once I have a full-time job, the numbers will quickly add up. What a relief to learn that I won’t have to join the cast of the 27th season of Survivor to realize my hopes of retiring as a millionaire, with financial security. Instead, just $50 a month for the next 40+ years will get me there.
There are lots of different ways to save for your retirement. I like Roth IRAs because of their flexibility. I can take money out of my Roth IRA at any time (only in case of an emergency) and pass it onto my heirs (looking way into the distance) without any tax penalties. Plus, I pay taxes when I put money into the IRA, but I won't pay when I take money out. What’s there now won’t be taxed again come my retirement.
The first step to opening a Roth IRA is finding a brokerage firm that you like. Personally, I’ve had great experience with Sharebuilder, ING Direct’s online brokerage service. It literally took about 10 minutes to get it all set up and start purchasing shares! And I did it all from my laptop, while lounging around at home. Investing a small amount of time and money now will really pay off in the long run.
While some of my friends find it a little strange that I'm thinking about my retirement days before I’ve even entered the real world, I'd rather think that my newfound obsession isn’t so crazy after all.