Building wealth: Best moves if you're 25 to 34

Just starting out? Now's the time to create a solid plan for investing and saving.

WHAT YOU NEED TO KNOW
:
Savings goal at age 30: 0.6 x your incom<br />e
Biggest cash drain: Student loans and other deb
t
Biggest challenge: Overcoming fear of investin
g
Biggest opportunity: Lots of time for your money to compound

TIPS<<strong>br />:
1. Be courageous. Nearly 40% of Gen Y-ers say they'll never feel okay investing in stocks, MFS Investment Management reports. Take note: Since 1926, a portfolio mostly in stocks has never lost money in any 20-year period while averaging gains of more than 10.8% a year, vs. 4% for bonds.

Get an age-appropriate mix with the target-date fund in your 401(k) or Money 70 picks Vanguard Target Retirement 2050 or T. Rowe Price Retirement 2050 .

2. Go for a Roth 401(k). The Roth advantage: You save with after-tax dollars, so, unlike a regular 401(k), you won't pay income taxes on withdrawals. That's a good deal if you'll be in a higher tax bracket at retirement, as is the case for many young investors.

Four in 10 large plans now offer a Roth option, Aon Hewitt says. To hedge your bet on future tax rates, split your contributions between a Roth and a pretax 401(k).

3. Don't cash out. More than half of workers in their twenties who leave a job do not roll their 401(k) into an IRA or their new employer's plan, says Aon Hewitt. Bad move: On a $10,000 balance, you could be left with just $7,000 after taxes and penalties. If, instead, you keep that money growing at, say, 6% a year, you'll have an extra $100,000 or so by the time you retire.

College borrowers collectively owe $870 billion, surpassing credit card debt by $177 billion, reports the Federal Reserve. Average loan balance: $23,000. To erase that debt faster:

25. Pay automatically. All government lenders and some private ones will discount your interest rate by 0.25 to 0.5 percentage points if you sign up for auto pay. The savings could cut a year off your repayment period, says student loan expert Reyna Gobel.

26. Make a "bonus" payment. Put half your tax refund or raise to good use. Paying an extra $600 a year on a 10-year $23,000 loan at 5.5% will save you $1,500 in interest and retire the debt two years sooner.

27. Get help. At tuition.io, you'll find tools to figure out which repayment plan is best for your personal situation.