Comments on: Roth IRA For Teenagers

By: –› Winter Utility Bills, Jim Cramer, and Interest Rate Changes

–› Winter Utility Bills, Jim Cramer, and Interest Rate Changes — Tue, 31 Mar 2009 19:20:03 +0000

[...] Roth IRA For Teenagers [...]

By: keith liptak

keith liptak — Tue, 10 Feb 2009 02:43:14 +0000

i have a son who attends the usaf academy. he earns about 900.00 a month.he started last july. they must pay for their computer, uniforms and misc. items. the first year most of their pay goes to pay for these items. he has made 900.00 a month for 6 months . i’m trying to teach him the value of saving when your young. i want to help him start a roth ira. so can i get him started for say 1000.00 dollars.

By: Alison@ThisWasn'tInThePlan

Alison@ThisWasn'tInThePlan — Fri, 30 Jan 2009 05:08:53 +0000

Looking back, I wish I would have started this sort of saving as a teenager! However, I think my parents would have been hard pressed to convince me that this was the way to go. I was a great saver and always understood the concept of compound interest, yet I’m fairly sure that saving for retirement would have seemed like such a far off and somewhat ridiculous choice for me at the time. Had my parents just done it, I would be thrilled and appreciative for a great start at my retirement savings, but I’m not sure it would have taught me anything other than that I had nice parents who wanted me to start saving for retirement.

It’s a fabulous opportunity for kids who are a bit more forward-thinking than I was though!

By: Stacey

Stacey — Wed, 28 Jan 2009 14:34:08 +0000

Both my husband and I opened Roth IRAs in high school – best thing we ever did! His parents matched, mine offered encouragement.

We both contributed about 10-20% of our income during high school and college, and now have a significant nest egg for 20-somethings. It’s a great way to start our adult lives – a five-digit retirement fund!

Ironically, we didn’t know the other was saving until we got married. Our parents are all older and near retirement, which I think is why they got us started on IRAs.

Starting financial skills early in life is so important. From an early age, my parents encouraged me to set aside a bit from every gift that I received. Then once I started working, it was just natural to save some of my earned income, as well. I can see the exact opposite in my cousins – saving has never come naturally, and they spend at least every dollar that they earn.

By: Frugal Bachelor

Frugal Bachelor — Wed, 28 Jan 2009 04:22:12 +0000

In high school, one of the guys opened up an IRA and everyone thought it was ridiculous. At that age having a couple thousand dollars was a really big deal to us. Now, 15 years later, he is working at Edwards Jones.

By: DDFD at DivorcedDadFrugalDad

DDFD at DivorcedDadFrugalDad — Wed, 28 Jan 2009 01:27:03 +0000

Great post!

The Roth is a great investment tool for people both young and old . . .

The best part is the fact that the taxes have been paid now, because taxes are certainly going up in the future. A benefit that won’t be fully appreciated until it is time to take the withdrawals . . .

By: almost there

almost there — Tue, 27 Jan 2009 22:45:58 +0000

Tom (comment #3), I contributed to a Roth IRA with Vanguard for my son. There is no minimum age if you are the custodian when it is establlished. We started contributing when he started working. Through last year the 20K we put in the Vanguard 500 index fund is worth 13.7K now. We plan on putting in another 5K this year, through his 21st year and then he is on his own for contrubutions. We aren’t worried about the value now since he has about 40 years until he can touch it.

By: marci

marci — Tue, 27 Jan 2009 22:30:58 +0000

Good info on the Roth for teenagers/grandkids. Thanks.

Growing up, I HAD to save 50% of what I earned/received as a gift into a savings account – there was no negotiating with my folks on that It was a good lesson to learn very very early on!

By: David

David — Tue, 27 Jan 2009 22:28:59 +0000

How would this interact with filing FAFSA for college financial aid. I know that that form requires the students total savings, and I believe they can require the student pay up to 20% of that amount (I think its also 5% of the parents savings). Would an IRA be included in that amount, even though the student can’t touch that money?

By: Whitney

Whitney — Tue, 27 Jan 2009 22:02:34 +0000

I had a lot of jobs as a teenager and some of them paid well. I hated my three-dollar-an-hour slave (ahem, nanny) job. I didn’t buy a lot (it’s amazing how little you spend when you are busy working and studying!), but I did contribute to my schooling. I was homeschooled and wanted to take private lessons. The books were expensive – like college – so I had to help pay for them. I do regret not saving some, but I don’t regret paying for those classes. I thought it was smart at the time. That being said, when my son is old enough to get a job, I will encourage him to save a portion of it, even if he is helping to pay for something he wants to do that is helpful for his future.