I recently read an article about the value of giving your children (or grandchildren) the gift of compound interest and a more secure retirement, in the form of an annual contribution to their Roth IRA. What a great idea!
The author’s point is that many young people are struggling to pay off their educational debt and mortgages, or cope with the costs of child-care. But that, of course, is the best time to start saving money towards retirement, since money invested early has more time to grow. Studies recommend saving between 15% and 17% of your earnings each year towards retirement — but many young people just can’t save anywhere near that amount at the beginning of their careers.
His solution: consider giving children and grandchildren a gift of $5500/year for deposit into a Roth IRA.