This post is targeted to you the millennial generation!

You have either just entered the workforce, or have been in it for a few years. Hopefully you’re not already planning to retire…if that’s the case maybe it’s time to look into other career alternatives. All joking aside, one of the best things you can do for your future is to max out your retirement plan contributions.  As many people know, the amount that you contribute now makes a BIG difference over time thanks to the time value of money (i.e., interest)! You might not be making the six-figure salary you dreamed of…yet, but regardless of how much money you are making it is in your best interest to contribute as much as you can towards retirement because you have so much time ahead of you!

Traditional Retirement accounts

Contributions to a 401(k), 403(b), and traditional IRA accounts are tax deductible because you pay taxes when you actually withdraw the funds in retirement.  In other words, you will be paying less in taxes today and allows a larger portion of your income to grow during that time.  The maximum you can contribute is $18,000 for 2015. Whatever your tax rate is today, you are essentially saving that % of money! 

Roth IRAs

I do have some young clients that are concerned about what could happen with taxes in the future, so they hedge their risk with a Roth IRA account. Roth IRA accounts are not tax deductible, but your money grows tax free meaning you end up with more tax-free money in the long run.  

Getting to the Max

Most people I know are starting families, buying homes, etc., so contributing the maximum is not realistic. If you’re in that situation, I would recommend gradually increase your contributions in increments over time. For example, you can automatically set up your 401(k) contributions to increase by 1% of your salary each year. This may not seem like much, but over time, as your salary hopefully increases your contributions will to without putting additional strain on your monthly budgets.

The only way that you can get to the maximum retirement contribution is by making it a priority for you/your family. Saving for retirement isn’t as fun as using those funds for something in the short-term, but I can promise you that will definitely thank yourself later!