Do you want to make a huge difference for your future descendants and their descendants? If so, do this exercise: Write down a list of your descendants, including the young babies.
If you want to change your world, start at home with your loved ones! You have the power to take steps to stop their future dependence on Social Security. Now is the time to help your heirs earn money and start their Free Market Roths.
Children could earn an income doing various jobs, such as household chores, shoveling the snow, cutting grass, and babysitting. Check with your tax preparer as to the annual earnings maximum allowed, because the amount and formula changes. Seeing they are young, you do not need to invest the maximum; but they must somehow earn the money.
The money invested doesn’t need to be exactly the same dollars earned—it could be a money—into the grandchild’s Roth each year for fifteen years, until she is through college. Then, as a young woman, she continues to contribute $1,000 a year into her Roth until she retires. If this money is invested in a growth asset class mutual fund with a historical average annual return of nine percent and she has a ten percent tax rate at her retirement age of sixty-seven, The Roth’s total $57,000 after tax contributions would grow tax-free, and at her future age of sixty-seven, would be worth approximately $1,634,000, which she could withdraw during her lifetime, one hundred percent tax-free.
If the ten-year-old had put the same amount of money in a tax-deferred traditional IRA and invested it the exact same way, she would have $163,000 less at sixty-seven years of age, because she would need to pay taxes on one hundred percent of the IRA. If Social Security is even available fifty-seven years from now, would you rather have your granddaughter draw an annual tax-free four percent off of her $1,634,000 Roth, an income of $65,360 per year, or rely on collecting Social Security, if it’s even an option? Not a hard decision!
Now is the time to help all of your loved ones, including your youngest children and grandchildren. Be their role model and guardian. Successful stress-free investors want financially freedom, so no matter what happens, they are capable of financially taking care of themselves.
Because of your proper planning and using the Free Market broadly diversified investing philosophy, all of your descendants could have sufficient retirement income, if you act now. Plus, they’ll remember you forever!
Written by: Maria J. Wordhouse Kuitula and Phyllis J. Veltman Wordhouse, Free Market Wealth & Stewardship Coaches, co-authored the book, Stress-Free Investing, available at Amazon.com. Maria is the president of Wordhouse Wealth Coaching and could be reached at 616-460-6518 or at [email protected]. For QUESTION LISTS and INVESTOR EDUCATION VIDEOS, go to www.WordhouseWealthCoaching.com. © Wordhouse Kuitula 2013. Photo: stock.xchng
