Work a Few Summers As A Teenager And Retire A Millionaire
27 August 2006Here’s an article over at MSN Money that points out that because of the power of compounding, if a 16 year old works for four summers, earns $2000 a summer, and puts the money into stocks in a Roth IRA – they’ll retire at age 67 with over a million dollars even if they save nothing else over the course of their life. That’s a million dollars made from only $8,000 in seed money. 47 years is a long time for the money to grow. So if you’ve got a teenager, next summer put them to work – for their retirement, not for their school. Frankly, if I had a teenager, I’d make them work and put the money into a trust that they couldn’t touch until they hit 65, invested in stocks. I’d be a mean parent – but if my kid earned $4,000 a year in a part time job, they’d retire with 2 million bucks. Money they earned, not me – and no amount of stupid decisions later in life could keep them from having a financially secure retirement.
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One Response to “Work a Few Summers As A Teenager And Retire A Millionaire”
September 7th, 2006 at 10:42 am
[...] CNNMoney regularly does profiles of people with various financial problems or accomplishments, and today they’ve got one on Jessica Nixon, a 23 year old who started saving when she was 16. The result is that she’s got about $50,000 put away for retirement now and is busily saving for a downpayment on a house. This is the payback on a strategy similar to the idea of working as a teenager and being able to retire on that money. If she’s got her money in stocks, she will – with $1.9 million dollars by my calculations, even if she puts no more money in and only earns 9%. [...]