But they couldn't be more wrong.
Today is the day for the young to start concerning themselves with retirement planning. Unfortunately, the easy option of a 401(k) isn't always available -- particularly to freelancers and the self-employed.
For those without access to a 401(k), or those just interested in expanding their retirement investments, the simple solution is an IRA.
What Is an IRA?
According to IRS.gov, "IRAs allow you to make tax-deferred investments to provide financial security when you retire."
Thanks, IRS! That really clears it up for us.
"IRA" stands for Individual Retirement Arrangements (or accounts), which are available to anyone with taxable income who is younger than 70½ years old.
What Types of IRAs Are Out There?
There are multiple types of IRAs, but the most common are the traditional and the Roth. Similar to a 401(k), an IRA offers people a variety of investment options, including stocks, bonds and mutual funds.
In simplest terms, a traditional IRA allows people to invest money to reduce their taxable income now, and the funds are taxed when the money is withdrawn in retirement. If you're making $40,000 a year and put $4,000 in an IRA, your taxable income will drop to $36,000. On the other hand, the Roth IRA gets taxed now, but the money will not be subjected to taxation when making withdrawals in retirement.
Notably, if you (or your spouse) already receives a retirement plan at work -- like a 401(k) -- you might not be eligible for a tax deduction with a traditional IRA.
There are a few other major differences between the traditional and the Roth. The Roth IRA only allows people filing single with an adjusted gross income under $114,000 to contribute the full amount. People making more than $114,000 but less than $129,000 can contribute a reduced amount.
For those married and filing jointly, the maximum income is a bit higher -- $191,000. Those couples with an adjusted gross income of $181,000 or less can contribute the full amount; above that, the gradual reductions kick in.
(There is, however, a way around those income limits: the "backdoor" Roth IRA conversion. According to data reported this past summer, this option is getting more popular rapidly.)
People using traditional IRAs must begin taking distributions by April 1 of the year after they turn 70½, while Roth IRAs require no minimum distributions to the original owner.
How Much Can You Put in an IRA?
For 2014, the maximum amount you can contribute to a traditional or Roth IRA is $5,500 (or $6,500 if you're 50 or older).
If you're rolling over funds from a 401(k) into an IRA, you still can contribute the $5,500 in the same year. Rollover funds don't count toward your contribution limits.
How Do You Start an IRA?
Most millennials who are interested in this subject have probably already Googled this question,
A wide variety of IRA options are available from banks, life insurance companies, mutual fund companies, stock brokers and other financial institutions. Be sure to shop around first to find the best investment choice for you.
Should You Have a 401(k) and an IRA?
It truly comes down to personal preference and disposable income. People who are already contributing to a 401(k) but are also battling debt might not want to start investing in an IRA until they're out of the red. Those who are debt-free might want to invest in other options, such as a mutual fund, to allow them easier (and earlier) access to their money.
When to Start?
Ultimately, now is the time to be preparing for retirement -- especially if you're young. Time (and compound growth) is an investor's best asset. The sooner millennials begin preparing for retirement, the less likely they'll be forced to work into their 70s.
(Correction: A previous version of this article had the 2013 numbers for Roth IRA income limits, and did not mention the option of a "backdoor" Roth conversion. We apologize for those errors, and thank our readers and Twitter followers for pointing them out.)
Erin Lowry writes for DailyFinance on issues relating to millennials, money and personal finance. She's also the blogger behind Broke Millennial, where her sarcastic sense of humor entertains and educates her peers.