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Planning for the Future Today

You might be thinking that it’s crazy to open retirement accounts for kids when your own retirement is under funded. Don’t stop reading just because you don’t understand the benefits of saving for retirement for children. Saving for retirement for children is easier than you think.

As a parent, you want to give your children every opportunity for success in life. One way to do that is by helping them start saving for retirement as early as possible. Early retirement planning for children might seem like overkill, but in reality it can make your kid a multi-millionaire.

There are several different types of retirement accounts for kids, each with their own unique benefits. In this post, we’ll look at the different options and explain how to legally fund retirement accounts for kids.

In addition, starting a retirement account for your child can help them build a strong foundation for financial security in the future.


I am not a financial advisor. Please consult with a qualified financial professional to see how these ideas fit in your situation.


Time Equals Money

First, let’s talk about the benefits of starting a retirement account for your child. The power of compound interest is truly remarkable. The earlier your child starts saving, the more time their money has to grow. This means that even small contributions can add up to a significant sum over time.

If your child begins baby modeling at the age of one, they only need to contribute $163 per month in order to retire with 10 million dollars. You read that right. For only $163 per month for 65 years, your child will have contributed $127,099 and the rest is INTEREST!

The golden number I’m aiming for in my retirement account is 10 million dollars. It is commonly understood that you can withdraw 3% per year and live off the interest without ever affecting the principal. If you have a 10 million dollar nest egg you can pay yourself $300,000 per year and still always have 10 million dollars.

It might seem impossible for you to reach 10 million dollars in your account, but your minor children still have time. The additional years of compounding interest are the magic formula to changing their financial future.

In fact, if your child were to earn and contribute $500 per month from birth until 59.5 (the legal age which dispersments can be drawn from an IRA), that account could have an estimated 18 million dollars! Wait until age 65 and you’re looking at potentially over 29 million dollars!

start retirement accounts for kids

Retirement Accounts for Kids

All funds put into a retirement account are required to be earned income. This means that your child has toin some way earn the funds based on the IRS definition. Allowance money, gifted funds, or found money are not allowed to be deposited into retirement accounts.

There are several types of retirement accounts available for kids. The most popular options include:

  • Roth IRA: This type of account is funded with after-tax dollars, which means that contributions are not tax-deductible. However, the money in the account grows tax-free, and withdrawals in retirement are also tax-free.
  • Traditional IRA: This type of account is funded with pre-tax dollars, which means that contributions may be tax-deductible. However, withdrawals in retirement are taxed as ordinary income.
  • UTMA/UGMA: UTMA (Uniform Transfers to Minors Act) and UGMA (Uniform Gifts to Minors Act) accounts are custodial accounts that allow parents to transfer assets to a child without setting up a trust. These accounts are typically for a child’s education rather than retirement, however the money can be used for any purpose once the child reaches the age of majority.
make your kid a millionaire

Retirement Savings for Minors

As a parent, you can legally fund a retirement account for your child by encouraging them to earn income. Business owners can legally hire their own children so long as they actually work for the income.

Kids can walk dogs, create a product, baby-sit, mow lawns, have a paper route,  model, or anything else their imagination comes up with. Make sure that whatever your child does, there is a paper trail and it is legal for them to engage in that work.

As you can see all over my blog and social media, my children model for my business. I hired them to actively participate in branding shoots, travel photography, and experiences while being photographed. In exchange they are compensated and those funds are directed to their ROTH IRA.

There are limits on how much you can contribute each year, but these limits are usually quite high. I won’t get overly specific in this article because the correct information changes from year to year.


I am not a financial advisor. Please consult with a qualified financial professional to see how these ideas fit in your situation.


Generational Wealth Building

Starting a retirement account for your child is a great way to help them build a strong foundation for financial security in the future. The earlier you start, the more time their money has to grow, and the greater the potential for compound interest to work in their favor.

Once investments get large enough to live off of the interest, your future generations gain freedom. They will be free to pursue their passions instead of spending time fighting for financial security. You will create an entirely new kind of legacy for your family.

Taking action on saving for retirement for children is something even generations you won’t be alive to meet, will benefit from. Start planning for their future today.

start a retirement account for a child
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