Suze Orman TwitterSuze Orman FacebookSuze Orman YouTubeSuze Orman LinkedIn
View Blog & News List

Turn a Child/Grandchild’s Summer Job into a Retirement Windfall.

April 21, 2016 at 12:00 AM

If you have a child or grandchild who is going to get paid for work this summer, I want you to consider a way to gift them a valuable retirement stake.

Anyone with earned income can open a Roth IRA. And yes, a summer job counts. I am not suggesting that your child or grandchild funnel any earnings from this year’s job into a Roth. It’s a bit of a stretch to ask them to focus on retirement, when their career hasn’t even started! (I do hope you expect them to save for a more immediate financial goal, such as helping with college costs.)

What you can do is offer to match all, or a part of their earnings, with the understanding that your match will be used by your child/grandchild to contribute to a Roth IRA. This is totally legit as long as they can show earnings that are at least equal to the amount of money they contribute to the Roth IRA. And as long as you gift no more than $14,000 a year to any individual, they will owe no tax on the money.

If an 18-year-old invests $1,000 in a Roth IRA and leaves it untouched for 50 years, it will be worth more than $18,000 assuming a 6 percent rate of return. Let’s say you do this for five years, and to keep things simple let’s just assume your child/grandchild earns $1,000 each of those five summers. Even if they didn’t add to the Roth after those five years they would still have more than $80,000 come retirement. That’s a nice legacy for you to build with them starting today.

Tag Cloud

four steps to retirement savings insurance mistakecalculate dependents annual income needsbalance transfer refundBankrequired disclosureaccelerate dental workSuze Orman spouse Kathy TravisJose RodriguezHDHP'sadvice for college graduatesmental healthconfident10% donate to charityFICO Scoreopen enrollment review Spendingno apologyretirementFiscal Responsibilitysecured cardfraudulent returnSchool of Social WorkCredit scoreCiti Simplicity Card dental insurance Post-Divorceincentives for health care wellness screeningPhyllis Shelton expert long-term careCollege of Veterinary Medicinepush yourself to save more for retirementsocial security never insolvent50 over 50is it necessary?8 month safety netLoveloan no longer than 36monthsHigh Credit Scoredon't extend mortgage lowest cost fund optionhigher monthly paymentmonthly dental insurance premiumitemized deductionovercome financial fearsWall StreetEric Dodge long-term care premiumsnew carearn allowancetelevision hostconfident of solutioniffy incomedear suzepercentage of women widowed 75-84eliminate credit card debtFree Debt EliminatorVeterinary Schoolpreexisting condition not coveredSandy Hook Promisedebit cardcollege studentCommencementstudent loan repayment planclosing costs 2% of loanfinancial concernshort term goal become member death benefit 20 to 25 times annual incomeMoney-Savinglow credit scoreSuze changed my lifepermanent life insuranceprotect your familygay marriage ban end Florida MotherpositiveARMdo you need life insuranceno waiting periodsavings pleasureMinor Children not enough life insurancecar leasingmarriage inequalityultimate compounding giftPrime Rate Increasechildren under 183 savings buckets 401KHigh FICO Score = Better Ratetitle insurancedon't ignore open enrollmenttaxesAmy Lacyetlearn good financial choicesprotect loved ones WillFinancial Awareness Video Festivalpaid vacationMarlo Thomasrollovergift up to 14,000closing feessuitableUS Tax Codealternative FICO scoreeight month living expense don't buy wantswrite new goallong-term care negotiate points with bank or sellersame sex marriage band end FloridaCory Bookergrandparent IRA contribution ritual scheduleInflation Benefithealthy gumsrent vs buyonly offered while employed bad decisionsno private loanfile asapcharges on credit cardMoney Marketclosing disclosurelife insurance name trust as beneficiaryemergency fund New american Dream better loan dealsdon't do five year car loanFinancial Gift CliffMass MutualEmergency Savingstraditional vs roth 401(k)is it necessaryOne Wallet At A Timeraise insurance deductibleinsurancebuy homeinsurance yearly reviewlet them have 50% controlhome buying budget2016 adjust estimated taxpoint cost offset by savingsage appropriate chorechildren's bookdo not pay allowance for good behavioradult childrenDurable Power of Attorney for Health Care401(k) Contributionsplanlower premiumpay down student loan debtprofessional advisorMost Influential Celebrities Listcnbc alarm clockone credit cardPrime Rate Rise 2015home ownershipswitch to spouse coveragesetup automatic savings withdrawAccuQuote.combest interest of investorincrease retirement savingsGiftsSave Us Moneyborrowing plan FRAheartachevalue moneyburn out4 Must Have Documents be kind to yourselfteach importance of helping otherssuccessETF'sYoung Adult premiumhealthy aging overspend on nights outStudent Loanorigination feesSatisfyingFinal Goodbyetax ID theftstrained relationship2015 financial roadmapallowancenot gender specific Selfishmeet monthly Washingtoncredit utilization rateHSA tax savingsFixed Rate Mortgagekeep a schedulesave HDHP no life insurance financially irresponsiblefile taxes quicklymoney vows20 year level term small changes is it kind?community bankidentity fraudlower interest ratefamily save at least $100 monthly740 credit scoredangerous money seasonMortgage Credit Availability Indexpresident Obamalousy investmentAARP Social security calculator40% toward financial goalfocus on needs19 years cash flow problemyours, mine & ourssecure creditinterest capitalizationcostly legal peace of mind20% down paymentFederal Funds Ratecar loanquick closing30 year mortgage SelectQuote.comdoctors in networkprescription tierbudgetschedule vacationno sneaking in feesthree year car loanhome insurancetoo expensive schoolresponsible with moneyFinancial Power of Attorneymax employee matchmarriage financial responsibilitypay more than minimumEasy Life Insurance credit cardno negativityfinancial independenceAmericans don't use all paid vacation timebe true to yourselfunsubsidized Stafford loanproperty taxdebt freepublic service loan forgiveness programlow down payment3% debt transferred dental savings planpurely financial standpointLifestyleFinancial Educatoradd teen20% down payment avoid feesreal estate mistakesteach your child good money habitsstore credit cardshigh credit score discountLTCi ASAPleave a legacyLong Term Care shoppingfinancial argumentsbreakdown projected monthly housing costpay 100% cashaffordable premiumcouple financesvalentines dayGracefinancial aid3 step financial road mapfocus on new truth retirement accountsbuy home you can affordderailed planStudent Debtbig results gift not loanbad retirement planningSuze Orman ScholarshipGay Rightsborrow each year, capitalization is going to pile up 6 month waiting periodfiduciarykid borrow firsthealthy retirement weightRevocable Living Trustmultiple lendersraising mortgage rates reduce monthly paymentChanging Livesmanage student loansFICO at least 720ignore 6 month grace period cut monthly cable billSuze Orman's Money Warsdream schooloverspend on dining outemployer offered life insurancehousing marketexercise reguarlyAlarm Clockstretch out haircut appointmentsback door Roth IRApay interest while in schoolGay Coupleswives should be involved in retirementFederal PLUS loaninterest on student loansCOLAget the most out of social security LTCfinancing car life insurancesidelinedpercentage men widowed 75-84co-sign Staffords this year have a fixed 6.8% interest rateengaged in financesHDHP/HSAmobile appno splurge college graduateLegal Guardianbest loan deal verify retirement plan with HR or plan sponsorhealthy youpowerfullower mortgage interestlong term carepay off debtcontribution can you afford itapproved medical 100% tax-freeanticipated salary!00% tuition paidfinancial goal phraseincreased auto insurance premiumat worst still pay 75% benefitraise deductiblesmonthly benefit student loan repaymentExhibitionBankruptcydon't derail retirement savingsrising home priceslong term goalcredit managementhigh premiumsFinancial Systemjuggle multiple financial goalsemployer funding HSApaying for collegejanuary billswomen outlive menRetirement SavingsInfluentialsretirment savingsHoliday Shoppingfederal student loan deferment pay credit debt ASAPnon conventional routeThe Suze Orman ShowLong Term Care premiumsdon't cover cosmetic dentistryteensbill paying prioritiesTeachOverspendingstudent loan debtFundsdental discount planworkaholicsame-sex marriagetake actionstay positivetax refund fraudfinancial fearshigher insurance deductibleis it true? near historic lowsLong Term Care Insurance buying car 2016always use all paid time offno fee transferFederal Stafford loanSuze Ormanhome loan credit score below 740 Financial Advicesave moneyloan big picture commitIRA contribution gifted moneyInvest for savings growthhigh deductible health care planenjoy saving compare monthly expensesVital Documents3 bucket approachbuy down Stock Investmentsno interestmake saving a pleasure8 month emergency fundlower overall drug costForeclosurereduce interest rateshop online guaranteed level term policyterm insuranceTelepicturesprovider of financial supportmoney-aware childdon't charge a pennyaffordabilityautomatic paymentmortgage brokerFinancial AwarenessFinancial Cliffcommunity collegeemergency fund savingsverify wellness screening and programsknow before you oweconsider roth 401(k)car buying mistakesHoliday Seasondepreciating asset Sandy Hook Elementary Schoolinitial tax break 10 year repayment plan mortgage interest tax deductionStudent Debt Crisismaintain standard of livingdon't use allowance as bribeescrowdon't defer interest paymentssocial securityFICO credit score credit card mortgageFinancialcontribute household expenses get health insurancebetter termsFinancial Solutions For Youwomen longer life spansavingsWarner Bros Television Groupsummer job match income Combo Insurance Productsstandard deduction get over life insurance phobiacostly insurance mistakehighest possible benefitno tax on withdrawlslive below your meansavoid burn outhigh FICO scoregraduationdebtannual cost of living adjustmentGoodbyeLTC shoppingcomparison shoppingCPI-Wgift grandchild IRA contributionBill and Pennycost of capitalization calculatorNew York Lifehigh down paymentConventional loan PMIcredit reportdon't blow tax refundstudentzero rate transfer dealsretirement planPersonal Financehome buying seasonoverspend on giftsCredit Card Interest Rateholiday spendingRetirement Incomewaive home inspection bidmortgage disclosurehome budget after tax costUniversity of Floridarequire chore in exchange for allowanceincrease emergency savingsBeautybuying a carautomate student loan paymentsCredit Card Rate Increaseshorter payback periodhome related tax break bonus reduce withholdingFederal ReserveARM CautionHDHP's are good for youmax benefit coveredunexpected expenseworst financial mistakeHow To Build Creditprotect and provide for minor child refinanceSuze is my biggest mentorcreate new truth2016 adjust withholdingletter to suzecompare provider pricingHeartCivil RightsCNBCbe good examplestaycationRevocable TrustEmployer Matched Contribution15 year mortgagehome buying mistakesteens and moneyFHA loan fees20 to 25 times annual incomeloan necessityAARPPBS Specialraising interest rates2015 record year car salesspecial saving accountstudent loan repayment estimatorInterestphysical healthPay Off Debt Before Retirementidentity theft15-year refinance dealfull retirement ageRoth 401(k)pay high rate off firstpay down car loanpaid in fulllower rateback-to-school budgetCD'sdoctor no longer in networkHDHP's are not bad2017 Taxesadjust allocations one annual feeloved ones dependent on incomeNewtownunder 18 financial gift20% equitymax employer matched 401(k) contributionage appropriate goalsInfluential Celebritygrandchild summer job IRA contributionget credit cardwould you decline a bonusno late fee social security not going brokeUniversity of Illinoiscut monthly cellular billsocial workincrease retirement contribution rateallowance taskswitch to roth 401(k)Giftface your financial fearspring summer low-cost index mutual fundAuto Savings no private loansdon't spend Suze approvedUrbana-Champaign8 Rulesonly refinance if it payswomen live longerSwap Older Annuities or Life Insurance Forbeshealthy retirement blood pressuredeath benefit needs for familycredit unionspeak new goalbest interest ratesreferrals public service career student loan repayment healthy teethForbes Top 10women long term careemotional stakesBaby Boomersbetter loan ratesautomatic withdraw to savings Must Have DocumentsRichDeath BenefitAshley Springerkids schedule paymentsdangerous retirement planmortgageretain separate credit cardsprotect dependent Moneyreal estate marketraise your deductibleresponsibleCommunication Skills earn more on savingsreplace permanent life insurance with termroth irauniversal college accesscommissionsno retirement funds for down paymentAdequate Auto and Home InsuranceHolidaylow mileage discountloan is giftterm life insuranceschool repay student loansstandard rate


View Blog & News List
People First. Then Money. Then Things.
Connect with me on Facebook Connect with me on YouTube Connect with me on Twitter
© 2017 Suze Orman Media Inc. All rights reserved.
 
 |  Search  |  Sitemap  |  Privacy  |  Terms
Sign Up For E-mail Offers
Open Panel
Close Panel