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Gen X’ers Must Juggle a Variety of Financial Issues
If you’re part of “Generation X” — the age cohort born between the mid-1960s and the early 1980s — you’re probably in one of the busiest phases of your life, as you’re well into your working years and, at the same time, busy raising a family. But just as you’re “multi-tasking” in your life, you’ll also need to address multiple financial goals.
In seeking to accomplish your key objectives, you may be asking yourself a variety of questions, including the following:
Should I contribute as much as possible to my IRA and 401(k)? In a word, yes. Your earnings on a traditional Individual Retirement Account (IRA) and a 401(k) grow on a tax-deferred basis, so your money can accumulate faster than it would if placed in an investment on which you paid taxes every year. Plus, since you typically make 401(k) contributions with pretax dollars, the more you contribute, the lower your taxable income. And your traditional IRA contributions may be tax-deductible, depending on your income. If you meet income guidelines, you can contribute to a Roth IRA, which provides tax-free earnings, provided you meet certain conditions.