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Are your kids working?

Jumpstart their path to financial freedom.


  • Let time do the heavy lifting for them.

  • Focus on tax-free investment opportunities.

  • Establish a solid foundation early to give them future flexibility.


Imagine your children retiring – being free to do whatever they want – at 50 years old.

Our kids are sitting on gold mines. They have more of something than Jeff Bezos, Warren Buffett, and Elon Musk.


You’ve heard me say this, and I’ll say it again – “Investing isn’t about how much money you put in, it’s about how much time you give it.”

Here’s how much a one-time, $1,000 contribution can be worth with historical stock market returns at age 65 depending on your age.

15 ➡️ $117,390

16 ➡️ $106,718

17 ➡️ $97,017

18 ➡️ $88,197

19 ➡️ $80,179

20 ➡️ $72,890

25 ➡️ $45,259

30 ➡️ $28,102

35 ➡️ $17,449

If they invested $1,000 per year from age 15 to 65 – a total of $50,000 in contributions – they would have $1,281,299 at age 65.

That’s with just $1,000 a year, and it could all be tax-free.

But the power fades quickly. Saving doesn't always become easier, and the only way to make up for lost time is to save even more.

So, here’s the question – Will your kids use time to their advantage and put themselves in a position that most people could only dream of?

Here’s how you can help them.

Teenager with a summer job

The investment growth potential is great, but imagine if all of that growth was tax-free.

Every penny can be theirs with a minor Roth IRA.

If your child has earned income - a formal summer job, babysitting, or cutting grass – they are eligible for a minor Roth IRA. It would be in their name, but an adult would serve as the custodian of the account until they are no longer a minor – typically age 18 or 21 in most states.

The 2023 contribution limit is $6,500. If you are not filing a tax form that documents their earned income, then you should consider keeping a log of earnings in case the IRS asks for documentation.

You can also make contributions for them. It doesn’t have to be their earnings that are contributed to the Roth IRA; they just need earned income to qualify for the Roth IRA. We even have some clients who make a “match contribution” for a little extra incentive to contribute.

Your child will also have access to their lifetime contributions tax-and-penalty-free at any time – the only downside being that the $5,000 can’t grow tax-free going forward. While an option, this is a last resort.

Recent grad starting their career

Congrats to you and them on their first job! As an employee, your child will have access to benefits that can supercharge their financial plans. They should focus on these four financial pillars.

Invest immediately

Contributing to an employer plan isn’t an option – it’s a must. At the very least, they should contribute up to the company match – don’t leave any free money on the table. Ideally, I’d like to see them contributing 10%, in addition to whatever match they receive.

No match? Doesn’t matter. Contribute 10%.

The most important part of saving and investing is building the discipline of paying yourself first. If it’s all you know, then you’ll never stop.

Manage your credit

If they have any credit card debt, they should pay it off as soon as possible. They need to understand what goes into their credit score and apply for credit only when absolutely necessary.

Using credit cards is not bad when used responsibly. No more than 30% of a credit limit should be used, and the balance should be paid off every month. Because the length of credit history is a factor, don’t close accounts - just cut up the cards.

Build emergency savings

There’s no hard and fast rule here, but I would say race to $1,500 in cash and then plan to split your discretionary cash flow between building more cash and other financial goals – investing, saving for a home, etc.

The end goal would be to have three to six months of their spending needs in cash for emergency purposes.

Protect yourself

As an adult with growing assets and responsibilities, I also recommend having three important legal documents in place:

- A will

- Power of Attorney for Healthcare, and

- Power of Attorney for Property (Finances).

Once they are an adult, being a parent or guardian doesn’t automatically give you decision-making authority. Save time, stress, and money by having these documents in place.

If their employer offers a group legal benefit, this is probably the most cost-effective way to obtain these documents. If that benefit is not provided, then I have several vetted local and national resources that I can refer you to.


The sooner these principles are in place, the stronger their financial foundation will be.

Time is their most valuable asset. Let’s make it count.

Frank Iozzo, CPWA®

President, Private Wealth Advisor


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