Now that you’ve gotten a ballpark number you need for retirement, I bet you’re ready to do some saving! So you’re finally ready to take the plunge and open an IRA but have no idea where to get started?

To start with, let’s consider a few things. Do you have a lump sum to open the account with? Some brokerage firms require anywhere from $500-2,500 for your initial IRA investment.

Is that a deal breakers for you? No worries, lots of brokerage firms have realized that’s an unrealistic amount to require from a broke twenty-something who is actually trying to make good life choices.

How much do you plan to contribute each month? Several of these brokerage firms are willing to waive any sort of initial investment in favor of signing up for monthly direct deposits of anywhere between $10-100 a month, depending on the company.

Best of all, a growing number of brokerage firms actually let you open an IRA with no lump sum investment AND no required monthly minimum contributions.

Another thing to consider is if you want to go Traditional or Roth. In case you’ve forgotten, Traditional IRAs are funded with pre-tax money – so you get a tax break right now. However, it means you will pay taxes on the withdrawals from that account when you retire. If you’re a high earner and expect to be making less in retirement, this is a great choice for you.

Roth IRAs are funded with post-tax money, so you pay taxes on it now, but withdrawals from your Roth IRA account, including the amount of money you earn from the investment, can be withdrawn tax free after you retire. Most people are advocates of the power of Roth IRAs and how, in many cases, it’s better to take the tax hit now and enjoy “free” money later – myself included. I’m in a low tax bracket now and I like knowing all the tax issues are just done with that account.

However, it’s worth noting that if you’re really into math, it’s worth crunching some numbers before you decide whether a Traditional or Roth IRA is for you – Matt over at Mom and Dad Money wrote this great article Traditional vs Roth IRA: Unconventional Wisdom for Young Investors that points out Traditional may actually be the way to go.

If math makes you want to beat your head against a desk, like me, maybe just stick with the Roth IRA. Either way… don’t get so bogged down in this decision that you don’t open an IRA! Opening an IRA is the goal we’re aiming for here today.

Some Highly Recommended Brokerage Firms:

• Fidelity Traditional IRA
• Fidelity Roth IRA (this is what I use!)
• Betterment IRAs —> Click on the link UNDER “Roll Over Into An IRA”
• E*TRADE Traditional IRA 
• E*TRADE Roth IRA
• Charles Schwab Traditional IRA —> $1,000 minimum to open account
• Charles Schwab Roth IRA —> $1,000 minimum to open account

One final bit of advice – when you deposit your money, it goes into a holding account. You still have to decide exactly what you want to invest in. This can be overwhelming, but a LOT of these companies have a free advice line or even pop-up chat boxes so that you can talk with an expert. When in doubt, you can set it to a general index fund or a target date fund.

Index funds are funds that invest in a lot of companies – for example, you can actually invest in the stock market as a whole. These are often called Total Stock Market Index funds. You can invest in the S&P 500, which is 500 major corporations. Funds like these are great for while you’re figuring out what you’re doing.

Target date funds are when you figure out what year you want to retire by and invest in funds targeting that year. They will reallocate themselves over time to make sure you have more aggressive investments (lots of stocks) while you’re young and that the investments become more conservative (more bonds) as you get closer to retirement. I have a target date fund.

Folks who already have IRAs, where do you keep your money? Do you recommend them?