Your teenager thinks a Roth IRA is boring.
They’re wrong. And in 40 years, they’ll know it.
A Roth IRA funded in your child’s teenage years is one of the most powerful wealth-building moves available — and almost no one does it.
How It Works
A Roth IRA requires earned income. Your teenager needs a real job — babysitting, lawn mowing, tutoring, a part-time job, modeling, acting, or any other legitimate work with documented income.
Once they have earned income, you can contribute up to that amount (or $7,500 in 2026, whichever is less) to a Roth IRA in their name. You can make the contribution on their behalf — they don’t have to fund it themselves.
The money goes in after-tax. It grows completely tax-free. Withdrawals in retirement are completely tax-free.
The Math That Changes Everything
$7,000 contributed at age 16, never touched, growing at 7%:
- At age 40: ~$75,000
- At age 50: ~$150,000
- At age 66 (retirement): ~$400,000
Tax-free.
Now imagine funding it every year they have earned income between 15 and 22. That’s potentially $50,000+ contributed during their teenage and college years — becoming well over $1 million by retirement. Without them saving a single dollar themselves after age 22.
The Second Gift: Financial Education
Beyond the math, a Roth IRA gives your teenager a reason to care about money. They have a real account. Real investments. Real growth. It makes abstract financial concepts concrete in a way no lesson can.
What You Need to Get Started
- Documentation of your child’s earned income (pay stubs, 1099, or a simple record for family-paid work)
- A custodial Roth IRA account (Fidelity, Schwab, and Vanguard all offer them)
- Your contribution — up to the lesser of their earned income or $7,500
That’s it.
Every situation is different. High-income families may want to consider how a Roth IRA fits into a broader gifting and wealth transfer strategy. A consultation can help you see the full picture.
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For educational purposes only. Not legal or tax advice. Contribution limits current as of 2026. Consult a qualified financial advisor for guidance specific to your situation.
The information in this post is for educational purposes only and does not constitute legal, tax, or financial advice. Contribution limits and tax rules are current as of 2026 and subject to change. Consult a qualified financial advisor or CPA for guidance specific to your situation.