As a public schoolteacher, Kim Gray has no misconceptions about what her retirement would hold if she didn't prepare for it.

That's why, Kim, 29, began investing $200 a month in a Roth IRA four years ago. "Being a teacher, I knew I wouldn't have a lot of money, so the sooner I started saving the better off I would be," she explains.

Her friends thought she was crazy to stockpile such a significant amount of money for her income bracket when retirement was so far off. They would ask, "Why are you doing that?" or "How can you afford it?"

Her standard reply: "How can you not afford it?" she recalls.

Although Kim has a pension through Chicago Public Schools, she decided not to depend on it to finance her golden years. Twenty-five years of service are required to be fully vested in the plan, and receive 100% of her pension, she notes.

"It would be a nice bonus, but I'm definitely not counting on it," says Kim, who is currently vested at only 20%.

Like many Americans her age, she's not counting on Social Security to take care of her, either.

Kim chose the Roth IRA because it worked well with her income bracket at the time, and she knew it would continue to do so in the future.

Roth IRAs are for people who have income from work or alimony, as long they make under a certain amount. For tax year 2007, it's $95,000 for single people or $150,000 for joint filers.

"I know I'm never going to make a lot of money," she says. "I need to save my money now so that I can have money later."

Kim offers this advice to those looking to invest in a Roth IRA:

• Take the plunge. Even a small amount contributed each month will add up significantly in a year or two. After a while you won't feel the pinch as much, she says. "I'm used to it."
• Start small and gradually increase your contributions. Kim currently contributes $300 a month to her Roth IRA, a $100 increase from her initial monthly contribution of $200.
• Have contributions automatically withdrawn from your checking account. Just remember when those contributions are made. "There have been months when the automatic withdrawal has come and left me broke, because I forgot about it coming," she says.
• Monitor your investment. Kim often accesses her Roth IRA online to see how much money she's making from her contributions. Four years in, she's seeing a lot of growth, which makes her feel secure, she says.

By Darci Smith

Interest.com Contributing Editor

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