One of the more controversial (at least in financial circles) items to come out of the budget recently proposed by the Obama Administration is a cap on retirement accounts.

The idea is to cap retirement accounts, preventing further contributions to tax-advantaged accounts. The reasoning is that, at a certain level, enough is saved up for a “reasonable” retirement and there is no more need for the tax advantage.

Presumably, instead of contributing to tax-deferred accounts, those who reached the cap would no longer be able to take advantage of the savings, and pay taxes on that income, instead of getting a tax deduction. (Of course, there are issues surrounding the fact that, eventually, taxes would have been collected on the money if it were withdrawn from a tax-deferred account down the road.)

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College graduation is rapidly approaching for many students. Soon, graduates will be starting new jobs, and learning about how to operate in the “real” world. They will be leaving internships and classes behind and trying to figure out how to navigate the pitfalls of the modern workplace.

Money decisions need to be made at this point, including what to do with the money that is being earned. One of the most important decisions is to decide to invest in a tax-advantaged retirement plan, like a 401(k).

If you want to outlive your money, it’s important to take advantage of youth and time. However, it can be daunting to handle the decisions that come with a 401(k). Kevin Gahagan, CFP, CIMA, and Principal of Mosaic Financial Partners, Inc. offers four mistakes that young professionals often make. If you want to make the most of your 401(k), avoid this pitfalls:

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One of the more interesting bits of data to come to my attention recently is the implication that young professionals are confident about their chances for a comfortable retirement.

State Street Global Advisors released the results of a survey that indicate that 82% of those under the age of 25 are “somewhat” or “very” confident that they have enough for retirement.

This is a stark contrast with those who are older, who are much less sanguine about their own chances of outliving their money.

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One of the questions facing the members of Gen Y is this: Will I be ready for retirement?

There are a number of challenges facing Gen Y (roughly defined as those between 18 and 34 right now), and many of these challenges are making it difficult for members of Gen Y to plan for retirement. Many of them are struggling just to get by as it is, much less prepare for a retirement that seems a long way off.

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When I was in my mid-twenties, I switched jobs moving from one defense contractor to another. My former employer, Northrop Grumman, offered a dozen or so investment options in the 401(k) and, all things considered, it was a pretty good plan. The fees were a little high but not so much so that you felt ripped off and the options were fair – not too many funds and not too few.

That said, I stilled rolled them over to a Rollover IRA at a brokerage firm and I’ll explain you why.

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When it comes to making retirement account contributions, it makes sense to carefully consider your options, and weigh your choices.

In many cases, workers try to make a decision between a 401k and an IRA — or at least try to figure out which should be funded first. A 401k  has a higher contribution limit, but the IRA often has more flexibility, and many people also like the Roth option that comes with an IRA.

What is not more widely known, though, is that a Roth option has been available for the 401k for a few years. You can choose to invest in a Roth 401k, and if you already have a regular 401k, you can also roll over your contributions to a the Roth version.

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I’ve been fortunate in that every employer I’ve ever worked for has offered a 401(k) defined contribution plan. I know that many people are not so lucky and reader Jennifer is one of them. Many smaller businesses can’t afford to set up a plan or simply don’t want to. Whatever the reason, Jennifer doesn’t have the option available to her. This week’s Help a Reader will focus on the options available for someone without a 401(k) at work.

Here’s an excerpt from her email:

My employer does not offer a 401(k) plan and I know I need to start one soon, I’m in my early 20s. I know that I can open up an independent 401(k) but I’m not sure where to start or if a 401(k) is even the best option. Help!

Thanks,
Jennifer

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For most of us, retirement is a nebulous concept. Retirement might be 20, 30, or even 40 years down the road. Our human minds have a hard time looking ahead so far, and truly grasping the implications. Even harder for us to imagine is the fact that we may need to ensure that our money lasts an additional 30 to 40 years into the future. It’s not enough to get to retirement; you have to get through the rest of your life as well.

However, for many of us, retirement will arrive with extra costs. It may not be enough to assume that socking away $300 a month is enough to get you through retirement. Here are some of the costs that may derail you during retirement:

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