Should I invest for retirement, even though I'm only in my early 20's?

You can accumulate far more money if you start investing early. Even modest contributions at a young age can grow into an enormous nest egg someday. Furthermore, if you need some of your money now, there are ways to tap your retirement accounts without a penalty.

Is it smarter to invest in a Roth IRA or a traditional IRA?

Although a traditional IRA gives you an immediate tax deduction, Roth IRAs are usually the best choice for long-term investing. Assuming you follow the rules, all of your withdrawals someday will be tax-free. That can be a far more valuable benefit than a small tax deduction right now, especially if you're likely to move up to a higher tax bracket as you et older. When you're young, you're often earning less and in a lower tax bracket than when you've reached the height of your earning potential.

Can I depend upon Social Security when I retire?

Social Security was always intended to be one leg of a three-legged stool: personal savings, employer-sponsored retirement savings, and Uncle Sam. With far fewer employers offering traditional pensions, you will likely have to take a more active role in saving and investing for retirement. Even assuming there are no changes in Social Security, you can’t depend on that benefit to fund your lifestyle. The average retirement benefit recipient received $1,007 per month as of June 30, 2006.

Although you’ll receive cost-of-living adjustments, Social Security benefits only replace about 40 percent of the average worker’s pre-retirement income. Since most financial planners say you’ll require 70 to 80 percent of your pre-retirement income to live comfortably in retirement, you’ll need personal savings to make up the difference.