Gen X'ers must consider needs of three generations

If you're a member of Generation X -- the age group born between 1963 and 1981 -- you may well be in the busiest time of your life. You're probably in the early to middle stages of your career, for one thing, and if you have children, they're likely still at home.

Yet despite the hectic nature of your days, you still have to look after the financial concerns of your children, yourself and possibly even your parents. This three-generational effort may seem challenging, but with some planning and persistence, you can help your family make progress toward a variety of goals.

To begin with, let's consider the needs of your children. Obviously, you're already providing for their living expenses, so from an investment point of view, your biggest concern may be how you'll help them pay for college. Here's a suggestion: Put time on your side and start saving as soon as possible.

You might want to consider opening a 529 college savings plan, which offers potential tax advantages. Saving for college is important -- but so is saving for your own retirement.

Consequently, you'll have to find the right balance of resources to devote to these two goals. To avoid shortchanging yourself, take full advantage of your 401(k) or similar employer-sponsored retirement plan. Contribute as much as you can afford right now, and whenever you get a raise, increase your contributions.

At the very least, put in enough to earn your employer's matching contribution, if one is offered. Your 401(k) accumulates on a tax-deferred basis, and your contributions are generally made with pretax dollars, so the more you put in, the lower your taxable income.

You aren't confined to investing in a 401(k), either, because you can also put money into a traditional IRA, which accumulates tax deferred, or a Roth IRA, which accumulates tax free, provided you're at least age 591/2 when you start making withdrawals and you've held your account at least five years.

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