Teaching children to save for retirement while they are young could really help them, perhaps even more than an inheritance.
As an example, lets say you taught your children to save 10% of all their earnings at a young age. Let's say your children go to college, and start their working careers at age 22. If your children worked with a goal of retiring at age 62, that gives them 40 years of savings to grow. For this example we will assume your children earn the median average income in the US of $41,535.00 per year, and 40 years of savings at 10% of income. If your child were to save at the bank earning 1% interest, their account would have $202,876.49 at retirement. If your child were to invest in mutual funds and earn an average 6% per year, their account would have $642,255.97 at retirement.
What is the moral of this story? Sometimes what is more important than how much you save, is for how long you save, and how you invest. Unless you are planning to leave over half a million dollars as an inheritance per child, you may be able to help them more by just instilling a good sense of financial discipline at a young age. If you have questions about how to help your children with setting up an investment account for the future, or one for yourself, contact us and one of our financial professionals will be happy to help answer your questions.
*This hypothetical example is for illustrative purposes only, and its results are not representative of any specific investment or mix of investments. Actual results will vary