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- One thing I wanted to ask Mr. Retirement was I have the Roth option or the traditional option for my 401K. As a millennial, what should I be looking at?

- So you're lucky, a lot of folks who have a defined contribution at work, a DC plan sometimes they're called, don't have a Roth option. So you're lucky to have one and when you're younger and traditionally when you're younger, you're in a lower income tax bracket, you would use a Roth and if you were in a higher income tax bracket typically later in your career, you would use the traditional defined contribution or 401K plan because you get the benefit of the tax deferral on it or you get the benefit of being able to lower your taxable income, I should say. So later on when you go to retire and you have a Roth and lots of money in it, you've already paid the taxes on it and you'll be able to withdraw that money tax free. Which is a great benefit of the Roth. Here's the problem that millennials have, right? And also older people but millennials in particular. You'll talk about investing because it's sexy, it's really fun to talk about investing and how much money you made and what stock you own and that sorta thing. But what people forget is you also need to talk about disability insurance and life insurance and I know it's boring, boring as all hell. I don't like talking about it, right? But if you don't have disability insurance, the biggest risk that you face as a young worker is the possibility that you won't be able to keep working due to injury, right? And it happens, if you're on a bicycle and you get hit by a car or you slip on the ice.

- [Kevin] I've had four knee surgeries, so I know exactly--

- There you go right, so you're not at work right? And if you don't have a disability insurance policy through work and even if you do, typically they tend to be short term, you'll still need to go buy one that you'd buy privately in the marketplace and they seem expensive, right? And they're really difficult to understand because you have to figure out is it my own career or is it just general pay and whatnot and so it's really hard to buy disability insurance. Maybe talk to a trusted advisor when you go to do it but do buy it and don't neglect life insurance. So you may have, I don't know, you have student debt?

- No.

- Lucky you.

- I know, I got really lucky.

- Lucky you but you might want life insurance for another reason, not just to pay for the student debt that has to be paid.

- That doesn't go away.

- It doesn't go away. So you might want to be able to at least cover that with life insurance but the other thing is you want to maintain your insurability. So when you're young and healthy, your premiums will be low, right? But let's say you get sick in your 30s, I don't know what happens, maybe leukemia or something, then you become not uninsurable but your premiums become all that much higher because now you're, the risk factor is that much higher. So don't neglect disability or life insurance and the other thing I'll mention too, I love talking about risk.

- We're finding out, we're finding out.

- I did warn you right, because life is about risk and reward. So we're always focused on reward but we seldom think about risk. So become a student of risk. There are several books out there that you could read that at least give you a sense of what risk is, right? Is the risk of, people always talk about oh, the number of airplane deaths that happen in a year, the number of people who've died in a car accident is far greater, right? It's almost far greater to be in a car than it is in a plane. So go become a student of risk and learn about statistics and what it may mean in terms of investing, life insurance, crossing the street.

The old adage, "You're never too young to start saving" could never be more true. But knowing the best way to save can be confusing.

Roth vs. Traditional 401(k)


Millennials who are just entering the workforce might be in a low tax bracket now and a high tax bracket later on in their careers. That means in retirement they stand to benefit more from contributing to a Roth 401(k) or Roth IRA than a traditional 401(k) or IRA.

By contrast, those who might be in high tax bracket now and a low tax bracket in retirement stand to benefit more from contributing to a traditional 401(k).

TheStreet's Robert Powell walks you through what you need to know about retirement savings in the video above.

And check out more from TheStreet's new video series 'Ask Bob' below:

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