One of my favorite things about authoring this blog is getting to read the various emails people send me from time to time. Yesterday, I received a simple, one question email…

I am fairly new to being financially savy and PF blogs. I just wanted to get your opinion. At what age/income should you open a IRA?

My response….

Never. Haven’t you watched the news in the last two years!? Quit your job, sell your assets, and move to Antarctica. America is doomed. Oh wait, what? The market is actually up 47.2% since this time last year? Fudge! I knew I should have invested in a Roth IRA instead of The Foxhole…

In all serious, the time to invest was yesterday. Don’t procrastinate, it’s time to get the retirement ball rolling. That is, assuming: you have income, you don’t have crazy amounts of high interest debt, you’re okay taking on some risk, and you don’t want to work until you are 120.

I really can’t tell you when you should begin investing, you have to make that decision for yourself, but I can share with you some pretty popular investment strategies for people under 40.

Step 1: Adjust your lifestyle so your expenses fall below your income. You have to be spending less than you make each month!

Step 2: Pay down any and all high interest debt (credit card, bank loans, etc) before you begin investing.

Step 3: If your employer matches a percentage of 401k investing, make sure you get that match. It’s free money and you have to be CRAZY to pass up free money. (If you don’t get a match proceed to step 4.)

Step 4: Look in to opening a Roth IRA. You can contribute up to $5,000 in it this year and it is a great investment vehicle for the younger crowd.

Step 5: If you were able to max out your Roth, then you should look in to going back and upping your contributions in your 401k from, say 5% to 10% (or whatever the heck you want).

That is the general order I come across in most books/PF blogs, but how you manage your money is really your call. If you want to live it up while you are young, contributing to retirement may not be the best idea. If you don’t want to be on welfare when you are in your 60’s then you may want to buckle down and begin growing your nest egg.

I personally began contributing to my 401K and Roth IRA as soon as I graduated college and got my first job, making $38k/yr. The earlier you start, the richer you will be.

I think her question is interesting and I’m curious, when all of you peeps started contributing to retirement. How old were you? What was your income? If you haven’t started yet, why not (debt, fear, stupidity)? Is there anything you would change in my “guidelines to follow” for retirement.

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