If you think a 401(k) is the name of a new indie band, then we need to have a serious discussion about retirement. Americans today are much more stressed about financial issues than previous generations. And guess what? As you get older, the stress compounds if you didn't take steps to set up a foundation for your retirement when you were younger. This process does not have to be intimidating.

Here are four steps you can take right now to get yourself on the right path to retirement:

A little money now can be a lot of money later. While you might see retirement as a millennium away in your 20s, you'll be surprised by how fast time flies. Start saving money now to allow it to accrue and grow by your golden years. A report this month from the Employee Benefit Research Institute found that 30 years of 401(k) savings combined with Social Security benefits should generate an income that replaces at least 60 percent of preretirement salaries. In other words, if you actively contribute to your retirement accounts for at least 30 years, you will likely have enough money for a comfortable retirement. Another way of looking at it: Setting aside $4,000 per year starting in your 20s could make you a millionaire by age 62, assuming an average annual return of 8 percent.

Investing doesn't have to be scary. Investing can seem daunting, but personal finance tools can help you figure out your investment style and find easy ways to invest your money. If you don't have time to study on your own, you can hire a certified financial planner to guide you. Don't think you have to know every up and coming or edgy mutual fund and asset class out there. Even "safe" investments will add significantly to your retirement nest egg.

Don't say no to company matches. If your company matches contributions to your 401(k), you're foolish not to take the offer. That's free money. The one caveat you need to consider is the vesting period. The money that you personally put into your 401(k) is yours, but some companies set a vesting schedule, which means the match will be earned over time (25 percent after one year, 50 percent after two, etc.) But for those companies that vest immediately, it's a no-brainer. If your employer offers a Roth 401(k), your contributions are made with after-tax dollars, meaning withdrawals in retirement will not be taxed at all.

Hone your budget. Debt and fixed expenses can make it challenging to save for retirement. The key is to bite the bullet and create a strict budget that allows you to plan for the present and your future. Financial planning tools can help track your spending, review your monthly expenses and see what spending can be trimmed. Check whether refinancing your loans will give you a financial advantage. Any surplus of cash you get from these efforts, stash it away for retirement. Don't look at it as a deprivation, but as an investment for tomorrow.

When it comes to saving for retirement, there is truth to what President Franklin Delano Roosevelt once said, "There is nothing to fear, but fear itself." Fear of starting to save for retirement can easily be overcome if you just take baby steps now - it will result in financial peace of mind later!

Hitha Prabhakar is a consumer spending and retail analyst and mint.com spokeswoman, a leading Web and mobile money management tool that helps people understand and do more with their money.





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