Twenty-somethings Turn Out To Be Savvy Investors with Roth 401(k)

This blog article from USA Today talks about a poll that shows that young people in their twenties are most likely to opt for a Roth 401(k) when their employers offer it as a retirement benefit. 

About 14% of the twenty to thirty year old demographic opted to invest their money into a Roth 401(k).  A Roth 401(k) combines the characteristics of a Roth IRA and a traditional 401(k).  Basically, the money from your paycheck goes into the Roth 401(k) AFTER taxes are taken out, whereas the money goes into the account BEFORE taxes in a traditional 401(k). 

This is encouraging to see young people recognizing the fact that getting the money taxed now is better than having it taxed when you are 65 years old and probably in a higher tax bracket.  Not to mention that income taxes NEVER go down over time, they always go UP.  If your employer offers the Roth 401(k) with a company match, then I would jump ALL over it.  It’s the best deal for retirement accounts out there.  The problem is that many employers are reluctant to offer it, because the product is up for a re-vote in the 2010 from Congress.  So, there’s a chance that it could go away, but the way that the marketplace is moving with more people needing to fund their own retirements, I could not imagine Congress getting rid of it.

Anyway, it’s great to see my generation becoming more personal financially savvy!  You baby boomers better watch out, the new twenty-somethings are good with technology AND money (well, I won’t go that far, but in this case we’ve made a good move!).