Starting my nest egg

Question: I just landed my first “real job.” I’m told I need to save for retirement (no pension at my employer). Where do I go to start saving for retirement?

Yes! Congratulations on the job and great foresight in looking toward retirement. If you’re in your 20s or early 30s, you’re in what I call the “money years.” These are the years most Americans aren’t saving much for retirement but will pay out huge in compounding interest when you’re in the mid 60s. So this is a great time to start. 

You should prioritize your savings in this order (assuming there’s no pension):

1. Matching 401(k). Since it’s matching, it’s literally free money. You’d be silly not to do it. But don’t contribute more than what your employer matches.
2. Roth IRA. Some people say go for the Traditional IRA first. These people are wrong. The difference is when the money gets taxed. A Roth gets taxed now and never again. A Traditional is tax-free now but gets taxed later. Obviously, there will be a lot more money to be taxed later (therefore higher taxes). But also, consider this: would you bet that taxes will be lower in the future or higher? Nearly every financial pro bets higher (Google: US Debt Crisis). So of course, you want to pay the measly 20% of $5000 now and rake in the pure untaxed millions later! By the way, there’s a $5000 limit per person on Roth IRA’s. If you’re married, you can each have one though.
3. Traditional IRA. It works the same as a 401(k) except its not tied to you employer. You can take it with you when you go. Not a bad option after you’re maxed out (1), (2) is preferred though.
4. Seriously?! If you’ve maxed out 1-3, then you make way too much money to be reading a personal finance blog. Go hire an expensive professional. 

How to do it:

Easy, simply jump on Scottrade, Fidelity, Vanguard’s website and sign up or call your cousin who sells this stuff and don’t miss another minute in your “money years”! Don’t settle for anything less than a growth stock mutual fund that’s averaged at least a 10% return in the last 5-10 years.