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Article By: Kelly Kirk-Xu & Emily Stevens

I know what you’re thinking- how could I even begin to think about my child’s retirement options when I’m not even retired? While it may make you feel a bit older than you are ready to feel, it is never too early to plan for your child’s future. Yes, from the moment your kid gets their first job – they’re qualified to open tax-friendly accounts that help them save for retirement.  The younger a person starts planning for retirement, the larger their head-start on retirement savings will be.  

If your child has worked a summer job or landed some money-earning gigs like babysitting, they may be eligible to open a Roth IRA.  

A Roth I.R.A. is an account that can allow your child to grow their investments tax-free.

To open a Roth I.R.A., your child will have to have a parent or guardian’s permission and acceptance of responsibility. By this, I mean you, as their parent, will have to agree to manage and open the custodial account for them until they are 18 years of age.

While it may be a little challenging to get your child to wrap their head around saving up their hard-earned cash for the future, they don’t have to be the only ones contributing. Since you will also have access to the account, you will have the perfect opportunity to contribute to your child’s future yourself!  Additionally, you can help them look at charts and fun bar graphs to see how their money can grow.  Start researching the cost of things they may want to buy in the future (a car, house, college tuition, fun holidays) and show them how possible their desires will be if they make small sacrifices now.  

Teaching kids about compound interest is one of the coolest things you can do, too.  Ask a kid if they’d rather take a job for a month, making $100/day OR making $10/day to start, but doubling each day.  Once they’ve given you an answer, work out what the monthly total will be… and you’ll see – they’ll be blown away by the power of compound interest.  You can then do some research together about how to start investing and get compound interest working for you!

Every penny counts when starting investments early, so no amount is really too small to contribute. You can match what your child contributes, double it, or just contribute when you have some extra cash if you decide to do so!

Research your child’s retirement planning options with them. Different options will have different account minimums and fees. Choose the option that works best for you and your teenager and sit back as your money master builds wealth for their future.