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Retirement planning? That's a good one. Wait, what?

May 24, 2012|By Megan Crepeau, RedEye

Here's a fun joke: retirement planning.

Haaaaa, I can't plan for next week, let alone age 65. I'm worrying about next month's rent, not my next five decades of health care. I'll reach retirement age in 2053. 2053, people!

Well, actually, 2053 might not be great for retirees. Safety nets like Social Security and Medicaid are somewhat in flux, and who knows what state they'll be in 50 years from now. It's more important than ever to take responsibility for your own retirement right now.

And, by the way, when I say now I mean absolutely as soon as possible. The sooner you sock away money for retirement, the sooner you'll start earning interest – your money works for you, no matter how little you're setting aside. And eventually, if you play your cards right, your retirement will be less Grandpa Simpson and more Cialis ad.

If you have a job that offers 401(k) benefits, this is really easy. If you don't, then it's still pretty easy, but the perks aren't as good. Here's the deal:

If you can get a retirement plan from your employer, and you haven't yet, let me know so I can come over to your workplace and slap you around. This is STUPID easy, people. Make an appointment with HR and sign up for a 401(k). You can designate how much money will come out of your paycheck each week (and this is all pre-tax, by the way). Here's the best part: Most companies will match your contributions up to a certain point. That's free money from your employers. That money will be invested in a mix of stocks and bonds, and if you start early enough, you can ride out any stock-market bumps and glitches before you retire.

If you're self-employed, unemployed, or just stuck somewhere without benefits, you can still make good retirement decisions. Think about starting a Roth Individual Retirement Account. They're very flexible – you can withdraw money at pretty much any point without any penalties. That means that if something comes up – medical expenses, for example – you won't get slammed with a tax penalty for taking money out of a Roth IRA like you would with a 401(k). That makes it a great choice for supplemental long-term savings, too, if you have a 401(k) and you want to feel extra righteous. The drawback here is that you'll have to pay taxes on your contributions, but you won't have to pay on any interest you earn.

I won't lie to you. Commitment to saving like this is going to be hard. The temptation to pull money out will be strong, and sometimes you'll need to give into it, because life happens. But the sooner you start, the happier "Future You" will be.

Megan Crepeau is a RedEye special contributor. She's a twenty-something college grad navigating this dumpy job market just like the rest of us.

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