3 Ways Your Kids Can Start Saving for Retirement Now
Written by
Sean Bryant
Edited by
Rebekah Evans
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According to a new survey from Allianz Life, 64% of Americans fear running out of money during retirement more than they do about dying. One of the best ways to alleviate this fear for future generations is to help your kids save for retirement now rather than wait.
By helping your kids save for retirement today, they can take advantage of compound interest, allowing them to accumulate a greater amount of wealth. Are you ready to help your kids with their retirement savings journey? Here are three ways to get started today.
Also here are the best bank accounts for kids.
Open a Savings Account
One of the easiest ways to help your kids start saving for retirement (or any other financial goal) is to open a savings account. There are no age restrictions and you can keep things simple by opening an account wherever you do your banking. Just make sure it’s a high-yield account to earn a meaningful amount of interest.
Most savings accounts will provide joint access for parents so that you can monitor any money coming in and out of the account. While savings accounts might not help grow a retirement account as quickly as other options, they will allow you to teach your kids good money management skills.
Custodial Accounts
Custodial accounts can be set up at most banks or with an investment broker and they are another great way to help your kids begin saving for retirement. Choose from a UTMA (Uniform Transfers to Minors Act) or UGMA (Uniform Gifts to Minors Act).
Through a custodial account, you, as the parent, can invest in stocks, bonds or mutual funds on behalf of your child. Just keep in mind that while you and your child will have access to the account and be able to make decisions, the account is owned by your child. Once they reach a certain age, the account will be transferred solely into their name and they will be free to use the money as they choose.
Because contributions into a custodial account are considered gifts, you need to be mindful so you don’t trigger a gift tax. In 2025, any contributions under $19,000 (single) or $38,000 (married filing jointly) are exempt from paying a gift tax.
Roth IRA
Roth IRAs are a great way to save for retirement. You’ll pay tax on your contributions today, but can withdraw your money tax-free during retirement. The biggest downside to using a Roth IRA to help your kids get a head start on retirement is that they will need to have earned income. While many people think this requires a traditional W-2 job, other means of income count as well. For example, if your child earns money from babysitting or mowing lawns, this would be considered earned income. Remember that your contributions can’t exceed your child’s earned income.
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Sources
- Allianz Life, “Americans Are More Worried About Running Out of Money Than Death.”
