Do it while you're young honey...

I've been exploring a lot of retirement investment options in addition to my 401k. As most of you know, generation y, you, me, the Millennials...won't be able to count heavily on Social Security benefits. Sucks for us! Some financial analysts predict that we're in for a rude awakening when retirement arrives. Because a lot of us don't take this as seriously as we should, they predict that our generation won't live very comfortable lives as old timers.

I am not claiming that mess, and I don't think you should either. So you can have a kitty litter of kids to take care of you orrrrr you can make some wise choices now to prove those analysts WRONG. I've read over and over again that one of the smartest things for young adults to invest in is a Roth IRA (of course this is after you've set up your emergency savings and are contributing as much as your company matches, to your 401k).

Another 2011 Resolution: by my 25th birthday...I'm going to be finished building my emergency savings and I'm embarking on the Roth. Let us explore....

One of the best things about the Roth IRA is the tax advantage! (oh how I love tax advantages) Because you can only contribute after-tax dollars into the Roth, you are able to withdraw the money tax free. Remember that with your 401k and a traditional IRA, the money goes in before it's taxed and therefore is taxed when you withdraw it out after retirement. Yeah...Unc Sam be bout his money. 

There are a few more big advantages of a Roth IRA:

1. Roths are much more flexible than your 401k because you can invest in pretty much anything you want...stocks, mutual funds, real estate...you name it, your Roth can put money into it for you.
2. You can withdraw any contributions you have made to your Roth whenever you darn well please without incurring any taxes OR penalties. (This is not true for either the 401k or traditional IRA)
3. You can use up to $10,000 of your Roth IRA to buy your first home (tax and penalty free). This not only includes your contributions but you can take out earnings also (TAX AND PENALTY FREE!), to go towards your first home. And this rule is for each person...so if you're a couple, each of you can take out $10,000 for the first home.
4. You can use money from the Roth towards the education expenses of your children. Although any earnings used are taxed...there is no penalty.
5. My absolute fav advantage is that your Roth can be as low or high risk as you'd like. Because you can invest in anything you want...this allows you the flexibility to be risk averse or risk seeking. I love that this gives me the ability to have a little fun and switch it up when I feeeeel like it!

 Next up...Roth IRA disadvantages. Yesss yesss...as wonderful as it is...Uncle Sam ain't plain dumb.

Stay tuned!