When looking at saving some of their hard-earned money, Millennials may want to consider Roth IRAs as their new BFF.

The difference between Roth and traditional IRAs or workplace 401(k) plans is that Roth money is tax-free in retirement. Even as the account grows over the years, helped in large part by compound interest, the original contributions can be withdrawn at any time, for any reason, with no taxes or penalties assessed.

“Roth contributions are made with after-tax dollars, but those in their 20s or 30s are probably in a lower tax bracket now than they will be later in life when their salaries are higher,” explains Melissa Ridolfi, vice president for retirement and college leadership at Fidelity Investments. “So not only would they likely be minimizing their lifetime tax bill, but they’d also have tremendous flexibility.”

In fact, it’s the flexibility of Roth IRAs over the shorter term – and what that can mean for two of Millennials’ most pressing issues – that doesn’t always get the attention it deserves:

• Buying a home. The homeownership rate among Millennials, age 25 to 34, is about 8 percent lower than that of Gen Xers and Baby Boomers at the same point in their lives, according to CNBC. As Tamara Sims, a research scientist at the Stanford Center on Longevity, told the network: “Buying a home at age 50 or 60 isn’t going to do you much good in funding a 30-year retirement.”

Now, remember what we said about original Roth contributions being tax- and penalty-free? With rare exceptions – and this is one of them – that doesn’t apply to any investment gains withdrawn before age 59½. Thanks to this caveat, first-time homebuyers (as well as those who haven’t owned a home for at least two years) may also be able to withdraw up to $10,000 of those gains and still not pay any tax or penalty as long as the account has been held for at least five years.

• Education. And why aren’t as many Millennials buying homes? One of the biggest reasons: crushing student-loan debt.

In another one of those Millennial-friendly exceptions, Roth money can be tapped to pay for qualified educational expenses such as college or graduate school for yourself, your spouse, or your children. Unlike with homes, though, you’ll only beat the penalty – not the tax – on any earnings you withdraw when following the same five-year rule.

And there’s evidence that Millennials are taking the message about Roths seriously.

As for 2020, know that the income cutoff for Roth eligibility (based on your modified adjusted gross income) has been increased over the last year to $139,000 from $137,000 for single filers and $206,000 from $203,000 for joint filers. Also raised: the annual contribution limit for both Roth and traditional IRAs (to $6,500 from $6,000 for those 50 and older).

“One of the great things about being a Millennial,” says Ridolfi, “is they have time and the power of compound interest on their side.”

I personally take advantage of the M1 Finance platform for the majority of my investment needs. The platform is intuitively user friendly. I also enjoy the ability to reinvest any dividends received within the IRA plan I set up for myself. This feature is very beneficial. The feature allows me to leverage the dividends received into more shares of the same dividend yielding stocks. More Shares equal more dividends, in which will increase the principle of the portfolio, and will yield more money in the long term.

If interested in starting a free Stock and/or Roth IRA portfolio, please click here. This is an affiliate link. Both you and I will receive $10 was you have completed you registration. (invitation code: vl5Liq7jm_S1)