Savings Help from Parents and Grandparents

Start to save Early

Let's suppose that you are 16 years old, in high school, and willing to work. Let's also suppose that you can clear about $2,000 over the course of a summer, if only because a doting grandparent puts money in the Roth while you take your earnings to school. If you invest in a Roth IRA, it will grow, tax-free, for as long as you have the account. All withdrawals from the account after age 59 1/2 will be tax-free.

If your money is invested in common stocks and you achieve the average compound annual rate on large-capitalization U.S. stocks, 10.7%, your account will grow to $9,378 at the end of the fourth year. You will be 20 years old. Invested in the same way, with no additional savings, the account will grow to:
• $25,917 by the time you are 30
• $71,625 by the time you are 40
• $197,943 by the time you are 50
• $547,037 by the time you are 60
• And $1,114,423 by the time you are 67
And you will have started and finished all of your saving before turning age 21.