Fund a Roth IRA if you don't have a 401(k)
. Many small employers don't have the money or manpower to offer a 401(k) plan at all, let alone one with a company match. That means you have to create and manage your own retirement plan.
For most young workers, the best choice is a Roth IRA, Sarenski says. Contributions aren't tax-deductible, but you can withdraw them anytime tax-free. And as long as you wait until you're 59 1/2 to take withdrawals, earnings are tax-free, too. (Funding a Roth is a good idea even if you are contributing to an employer's 401(k) plan; read on to find out more.)
You can invest up to $5,000 in a Roth in 2012. That doesn't mean you need $5,000 -- or even $1,000 -- to get started. Some mutual funds and brokers, including Schwab, will waive minimum investment requirements if you sign up for an automatic investment program.
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