A Gift Your Children Will Enjoy in 50 Years
Did your child or grandchild work last year in one of their first jobs? Scooping ice cream, working as a camp counselor? Maybe a virtual internship? Chances are they were thrilled to get a paycheck.
But I doubt they thought of saving anything for retirement.
Would you like to kick start their process of saving and investing? Consider funding their Roth IRA contribution.
For the 2024 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 $7,000. Don’t forget to make the contribution prior to their tax-filing deadline, usually April 15th. Please check with your tax advisor regarding income limits.
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!
Shari Greco Reiches
Shari Greco Reiches is Co-Founder, Principal and Chief Growth Officer of Rappaport Reiches Capital Management. She is the architect of the firm's Maximize Your Return on Life Solution, which aligns clients' financial planning with their Core Values. She is a frequent speaker on financial planning and values, author of Maximize Your Return on Life - Invest Your Time and Money in What You Value Most and enjoys mentoring women in the wealth management profession. Please connect with Shari below. She loves to talk about investing, financial planning, and Barry Manilow.