Editor's note: You're never too young to start saving for retirement...

Government programs like Social Security are running out of money. And more than any other time in decades, today's workers can't rely on Uncle Sam for support when they retire.

That's why Income Intelligence editor Dr. David "Doc" Eifrig says it's more important than ever to start putting money aside for your future needs – no matter how close you are to retiring.

It's also why you must encourage your kids and grandkids to do the same. While the younger generations are saving more than those in the past, they still need to do a lot to prepare for retirement...

Today's Masters Series comes from the July 13, 2016 issue of Doc's free Health & Wealth Bulletin e-letter. In it, he reveals the key financial decision every person needs to make... how to earn a big tax credit through your retirement account... and how to save money with a certain type of health care plan...

The Only Thing Millennials Get Right

By Dr. David Eifrig, editor, Income Intelligence

I hate to say it... but "millennials" are getting something right.

I'm talking about retirement savings. The so-called millennial generation is saving more than past generations.

A study from the insurance and investment firm Transamerica showed that 88% of millennials are saving for retirement already. And they're starting sooner... In 2016, the average 30-year-old started saving at 25, but the average 60-year-old didn't start until 35.

But while they're saving earlier, millennials still aren't saving enough... Worse, many of them hesitate to invest in the stock market or even in retirement accounts like 401(k)s or IRAs. That means their money is just sitting in savings accounts earning nearly nothing.

We need to make sure our kids and grandkids prepare for the future. With Social Security's insolvency on the horizon, we need to make sure they start planning today.

The first lesson we should teach is the power of compounding. Using time to boost your returns is the best way to build wealth.

And we should teach the younger generations some other lessons as well...

Related to that, my team and I put together a few key ideas for kids today who are just coming out of high school or college, getting their first jobs, and starting to take a hard look at their finances. These are the things I wish I had heard at age 20 or 25. Most of them still resonate with seasoned investors...

1) Take your employer's money.

If there's one financial decision that every single person needs to make, it's this... Always contribute to your 401(k) if your employer matches it.

Never underestimate the power of a 401(k) account. A 401(k) is a retirement account that your employer sponsors and manages.

Our employer matches half of an employee's contributions up to 6% of his salary. That means if the employee sets aside 6%, the employer adds 3%... for a total of 9%. That's an instant 50% return on your money...

Skipping out on that free money is the worst mistake in personal finance.

2) It's never too early to start an IRA.

Another type of retirement account – and one that doesn't require an employer to set up – is an IRA. The real benefit to an IRA is the tax savings...

When you put money in a traditional IRA, you get a tax deduction for the initial deposit, and the government defers taxes on the money until you withdraw it, typically sometime between ages 59.5 and 72.

Deferring taxes saves more than you think. If we take two people, each with $10,000, and have one invest in an IRA while the other invests in a trading account and pays taxes, we can see the power of not paying taxes. After 30 years, the tax-deferred account will be worth $996,964. The taxed account will be worth $791,347. That's more than $200,000 extra just by avoiding taxes.

Putting money into an IRA is also a way to earn a big tax credit...

The Saver's Credit matches a portion of what you put into your IRA up to $2,000 (or $4,000 if married filing jointly). The credit amount is based on your household earnings. For example, in 2021, a married couple earning between $43,001 and $66,000 can earn a tax credit equal to 10% of their IRA contribution.

The tax credit gets bigger for lower income levels... If the married couple makes less than $39,500 in 2021, the credit is 50% of their contribution.

You can also choose to set up what's called a Roth IRA. This works like a traditional IRA, but you pay taxes on the money before you deposit it. The IRS won't tax future withdrawals.

3) Make money off your health savings.

Health care plans in the U.S. are pricey. Many of us can't or won't pay for 100% coverage with no deductibles.

That's why there are plans called "high-deductible health plans," or HDHPs. These work by offering a low baseline coverage – so you're not shelling out for every possible test and procedure you probably won't need. But they come with high deductibles plus out-of-pocket expenses... The deductible minimum for individuals this year is $1,400.

To increase the benefit, set up a Health Savings Account ("HSA") with your HDHP. An HSA works by allowing you to bank pre-tax dollars. You can then use that money to pay for health expenses. Best of all, there are no use-it-or-lose-it rules.

I recommend making the maximum contribution ($3,600 for individuals and $7,200 for a family). If you can't afford that, try taking your deductible amount and dividing it by the number of paychecks you earn each year. That way, after one year, you know you'll be able to cover the full deductible if any emergencies crop up.

And here's the big loophole... The IRS allows you to use your HSA like a garden-variety IRA. You can just keep putting money in it until age 65. Once you hit 65, you can withdraw the money without penalty for any expense... you'll just have to pay taxes if it's non-medical.

It's never too early to start taking advantage of retirement accounts. If you have children or grandchildren ready to start preparing for their future, I encourage you to share this essay with them.

There's nothing better than starting your children or grandchildren on the road to taking charge of their own financial futures.

Here's to our health, wealth, and a great retirement,

Dr. David Eifrig

Editor's note: These three strategies can help your kids or grandkids maximize their retirement dollars. But if you're a retiree – or are about to retire – there's something else you must do to protect your savings from being depleted...

According to Doc, the greatest upset in the history of American retirement is looming – and it could be headed straight for your nest egg. That's why last Wednesday morning, he hosted a "wake-up call" to answer all of your most pressing retirement questions – including the best and safest place to put your money... and what changes you should make to your 401(k).

If you missed it, that's OK... There's still time to watch the full replay of Doc's presentation before it goes offline. Get started right here.