Did your child or grandchild work last year in one of their first jobs? Scooping ice cream, or maybe a virtual internship? Chances are they were thrilled to get a paycheck.
But I doubt they thought of saving anything for retirement. If they did, they are smart financial thinkers and we are hiring!
Would you like to kick start their process of saving and investing? Consider funding their Roth IRA contribution.
For the 2020 tax year, you can contribute a gift directly to a child or grandchild’s Roth IRA account, up to the amount of their earned income, with a maximum contribution of $6,000. Don’t forget to make the contribution prior to their tax-filing deadline, usually April 15th.
What if they are under the age of 18? First, cherish each moment, it goes by so fast. But as far as a Roth, no problem, you can open a Custodial Roth IRA.
A gift that they may not touch for fifty years may not bring an immediate scream of joy. I did this for my girls with their first jobs, and often got a “thanks mom, what’s for dinner?”
Still, I used the gift as an opportunity to talk about what the future may bring for them. How I felt when I had my first job. The importance of saving. Investing. Patience. Discipline. Old fashioned ideas, but like the compounding of interest, they have such impact over time.
Now that my daughters are in the working world, they appreciate the Roth IRAs. "Wow, mom, that was a great idea!" Positive feedback from my girls. Priceless.
I may not be around when they retire. I hope I am! I know they will enjoy the gift even more then and really think mom was so smart!