I know 59 and ½ sounds really far away when you are just starting your career and trying to make enough to pay your rent. You probably have, at the very least, thousands of dollars of student loans, a ton of credit card debt, and a lengthy list of unnecessary expenses that you’re pissing away what money you DO have on (face it — you’re never going to make that third trip to the Mixed Martial Arts gym, buddy).
It’s easy to get caught up in “taking it easy,” enjoying your youth, and figuring out what it is you really want to do. The fact is, though, that there is a tremendous likelihood that Social Security won’t cover you for shit by the time you’d be eligible to collect it. That’s why you should look into online investment services like Mass Mutual and Vanguard to start blessing off your retirement fund now. Peep this chart that I’ve… er… borrowed from Fidelity that illustrates the point (assuming you invest $5k/year towards retirement):
As is the case with many things in life, green=good. As I’ve implored almost every single co-worker I’ve ever had, you should — at least — be maximizing on any employer match offered on your 401(k) plan (or 403(b), etc.). Depending on how much your employer matches, you are essentially automatically getting at least a 50%, if not 100% return on your initial investment.
Equally important is that your contributions are not taxed, and that that money will grow for decades before you ultimately do pay tax when you withdraw it in retirement. You can expect an average annualized return of about 8%, provided you don’t do anything stupid like buy a thousand shares of BP.
If you can afford to invest a little more after you’ve paid for your Jersey shore timeshare (NOT an endorsement) and have maxed out on your 401(k) match, it’s time to open a Roth IRA, player. The rules are similar to a 401(k) plan, with the major difference being that you contribute to a Roth with after-tax dollars. You are limited to a maximum contribution per year (for 2010, it is $5,000), and you become ineligible if you earn an annual income of $120,000 or more (and if this your case, you probably shouldn’t be reading this blog). It might sound like a kick in the balls at first to have to use after-tax dollars rather than a percentage of your gross salary (not to mention contributing 25 to 40% more at a time), but the long-term tax advantages are actually much better. Unless you are balling out of control at 25, chances are you are going to be in a higher tax bracket by the time you reach age 60 than you are now.
It’s easy to find excuses why you can’t afford to start building a future retirement nest egg because of short-term expenses. You should take a closer look at what you are spending all of your disposable income on, and what you can cut out without really affecting your quality of life (do you really need to order the Kobe beef, son?). Trust me: you won’t miss the 3 to 6% you’ll be contributing to your 401(k), all the while setting yourself up to be able to quit working comfortably when the time comes. If you start making small contributions over your working life at a young enough age (by 25), you can easily end up with $1.5 million or more in tax-advantaged savings.
Matt Northrop, just barely still in his 20s, has been advising friends, family, and colleagues on personal finance for years and finally had the balls to publish content about it. He has loved living in NYC for more than 5 years, and sincerely desires to help everyone get hooked up. 
Couple more PROTips:
good tips
i’m going to check them out
but just because i’m young and poor
Searching for this for some time now – i guess luck is more advanced than search engines