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you’ve got the option to help your children achieve that feeling.
They can become a decamillionaire in their 60s without ever saving a cent in adulthood.
As a cherry on top, they wont even pay taxes on their withdrawals in retirement.
Here are a fewsteps to take to set your kids up for retirement now.
Even babies can have a Roth IRA.
Heres the kicker, though: to contribute, an accountholder must have earned income.
So a baby can only contribute if they earn an income, such as starring in diaper commercials.
The older they grow, the more opportunities they have to earn income.
As their parent or guardian, youll need to sign as the adult custodian for the account.
Full control passes to your child when they reach adulthood.
If you own or manage a business, you could hire your child and pay them as an employee.
Alternatively, you’re able to help them start their own business or freelance gig.
The IRS lets you give them up to $19,000 tax-free in 2025.
Imagine you help your child max out their Roth IRA for a decade between ages 12-22.
That doesnt sound impressive until you give it decades to compound.
By age 60, theyd have $5,029,140.
If they wait until 62 to start taking Social Security, theyd have $6,127,519.
By the full retirement age of 67, theyd have over $10,040,653.
And at the maximum benefit age of 70, theyd have an impressive $13,503,562.
Play around with the numbers using a compound interest calculator such asInvestor.gov.
Fortunately, opening a Roth IRA with your kids opens the door for those lessons.
Show them how index funds work.
Sit down together to pick one to five funds to invest in, through their Roth IRA.
Explain the difference between Roth and traditional IRAs and how other tax-advantaged accounts work.
Point out thedifferent tax ratesfor income versus capital gains.
Self-employment taxes, also known as FICA taxes, come to 15.3% of self-employment income.
Read more about FICA taxes on the Social Security website.
you’re able to set your child up for a wealthy life without spoiling them.
Teach them personal finance and investing, and help them max out their Roth IRA.
Theyll thank you when theyre a decamillionaire in retirement, even if you arent around to hear it.
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