When Should You Start Saving for Retirement?
As a college student working part-time, I have saved up a few thousand and I am curious as to what to do with that money. My high school teacher reinforced the idea that I should start as early as possible but does it make sense to be saving for retirement before I'm 20 and have a full-time job? When did you guys start saving for retirement and/or investing in a 401k?
Now.
Start with a roth IRA. After tax money that will then grow tax free. No forced takeout I believe. Max 6k a year.
Max your 401k at work ~20k or so at your job if you have one.
If you max those out and have luck with the market both accounts should be worth ~7 figs if you retire at 67.
Take the rest. Stick it in a brokerage account. Buy stock.
Save 30-100k. Buy a house, rent it out.
If you have money after that go invest in some speculative businesses if that's your thing. Oil (you can get into small time plays with 10k+ if you network with the right people); Dry Cleaner, etc. High risk high reward.
But the first two things will make it so you can actually retire.
Contributions to IRAs are not tax deductible after a certain income limit and ROTH IRAs are not allowed at all after a certain income limit and assuming your employer offers a 401-K.
If you have kids, fund 529s after maxing out your 401-K at work.
Build up an emergency fund. Buy a house (your personal residence).
If you have done all that already, buy some low cost index funds tilted towards equities. Fidelity or T Rowe Price. Invest and forget.
I don't think it makes much sense to put a few k in your 401k. In the grand scheme of things, it's next to nothing.
You're gonna earn a lot more cash once you start your career and saving a few grand in your 20s is not that big of a deal. Personally, the enjoyment I get of spending the money today is worth far more to me than a more comfortable retirement in 40 years.
Spend the money on champagne and blow during spring break!