Your Kids

Retirement Planning for Young Americans

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Your Kids

Did you know that your kids can have Retirement Plans?

Young children can have retirement plans - either Traditional IRAs or Roth IRAs. If they have income from modeling, for example, that can be placed into an IRA. If they do chores for you or neighbors, or babysit, they can put that money into an IRA.

Many parents and/or grandparents open IRAs for children as the power of compound interest is given a huge jump-start. For example, a $5000 one-time investment with an annual return of 10% would yield over $1.5 million in 60 years (in a Roth IRA it would be tax-free to the recipient at age 60!)

Saving SMART for Higher Education

Why is saving for college on a Retirement Planning website? Because if you have to remortgage your house, take out loans and use your savings that should be for your retirement to pay for college, you were not prepared!

Even if you can take money out of your retirement plans to pay for other expenses, it is rarely advisable...you are sometimes better off finding a low-interest loan.

Talk to your accountant and financial planner about College Savings Plans including 529s and Educational Savings Accounts/ Coverdell's.

Tax Guidelines

For incomes less than $1500/year, the IRS does not require a tax-return. Talk with your CPA and/or Estate Planner about how to file your child's IRA/ROTH IRA.