It is true that the sooner you begin saving for retirement the better off you will be. However, it does not make sense to put aside money for retirement when you are still working to earn your degree. This is especially true if you are going into debt each semester to pay for you tuition or room and board.
If you are working while you are in school and you are able to pay cash for your tuition you may consider putting aside money for your retirement. Before you do this you should have an emergency fund of three to six months of expenses set aside. Additionally you should not have any credit card debt. Once you do this you can begin investing in a Roth IRA or your 401(k).
It is important to realize that your education is one of the biggest investments that you are making in your future. It will increase your earning power, and allow you to save more towards retirement after you graduate. While you are in school you should focus more on your studies and the experiences that will prepare you to be competitive in the job market. This may mean taking a low or no pay internship instead of putting money towards retirement.
While you are in college the longer view is landing a good job so that you will have the extra money to put away each month. You should also make it your primary focus to stay out of debt. The less debt that you have when you graduate the sooner you will be able to pay it off and really begin focusing on retirement. Some college students will take their loan money or grant money and invest it in mutual funds because the rate of return is generally higher. This is not a great idea if it is loan money. You should never speculate or use borrowed money to play the stock market. This can set you up for financial disaster later on.
If you are still in college you may want to take a course on investing or money management while you are there. This is a great time to get acquainted with how the market works and how to choose a good investment. It will also give you the opportunity to watch the stocks and mutual funds without risking your own money right away so that when it is time to invest you will be comfortable and confident in the decisions that you are making.
