A Charles Schwab study, released earlier this year, showed that the younger generations expect to retire at 60 years old, which is seven years before Social Security kicks in for their age bracket. But, is that a reality?
Retirement Basics: What's a Roth IRA?
Mr. Retirement himself broke down what the younger workforce needs to know.
In general, experts say adults entering the workforce use a Roth IRA for retirement, but over time they should consider using all three types of accounts.
The Roth IRA is like a traditional IRA in one respect: The money in your Roth IRA (including earnings and gains) grows tax-free. But the Roth IRA differs from a traditional IRA in two ways:
With a Roth IRA, you contribute after-tax dollars into the account; Roth IRA contributions aren't deductible. By contrast, you may be able to claim a deduction on your individual federal income tax return for the amount you contributed to your traditional IRA.
Breaking Down 401k's
Those who are new to the workplace may not even know about their company's 401k plan.
Some of the younger generations don't even realize that the 401k is technically an investment.
"A 401(k) plan, named after the IRS tax code section that details 401(k)'s, is an employer-sponsored retirement plan that enables career professionals to save money for their post-working years in a tax-deferred manner. Once a worker retires, any withdrawals from a 401(k) plan are taxed by the IRS," wrote TheStreet contributor Brian O'Connell. "Any contributions to a 401(k) plan can be deducted from the plan participant's taxable income; assets accumulate in a tax-deferred manner. The idea behind 401(k) plans is to defer taxes until retirement, at which point, the plan participant is in a lower tax bracket. 401(k) plans are by far the most widely used employer-based retirement plan."
"401(k) plans can--and do--offer stocks, stock funds, bond funds, money market funds, exchange-traded funds and annuities," wrote O'Connell.
Ask Bob Part 2: This May Be the Biggest Asset Millennials Have for Saving Money
Investing Through AppsDon't want to lose money in the stock market but want to start building up a portfolio?
Apps such as Robin Hood, Stash and Acorns are becoming more and more popular for the younger generations who want to start small.
Sign up for TheStreet's Retirement Daily to learn more about saving for and living in retirement.