We're here to talk finance, not food. But let me digress for a moment. Do you regularly go out to dinner (at a real restaurant, not a fast food joint) with your special someone? If so, according to Zagat’s you’re probably spending about $40 a person (for a total of $80 a dinner).

Got a family, you say? Perhaps, in your busy schedule, you find it necessary to have your family meal at that aforementioned fast food joint (that’s about $5 a head for a total of $20 a meal for a family of four). Still not striking any chords with you? How about that daily Frappuccino frenzy (about $3 a cup)?

That food adds up to around $1,000 a year. We'll return to this figure in a moment.

When thinking about retirement, people have two overriding fears: Outliving their retirement savings and outlasting Social Security. If they’re that worried about themselves, think how worried they’d be if they consider their children’s (or grandchildren’s) retirement prospects.

What if I told you there was a way to easily brush aside those fears for those children? What if I told you the solution doesn’t involve fancy products, fly-by-night salesman, or too-good-to-be-true promotional pitches? Would you be interested to discover how people are already doing it?

Well it’s all laid out in a series of recently published articles. What I’m talking about is the Child IRA (see “Everything You Always Wanted to Know About The Child IRA,” FiduciaryNews.com, July 12, 2016 to get a quick recap of the concept and why it’s beginning to turn a lot of heads.).

The great thing about the Child IRA is people don’t need to change service providers to take advantage of it. It’s not a proprietary product. It doesn’t require large minimum investments.

In fact, it’s not just as easy to start as a regular run-of-the-mill IRA, it IS a regular run-of-the-mill IRA!

With one key difference, however: It’s started by and for someone below the age of 18. Well below the age of 18.

Ideally at the age of “fresh out of the oven.”

Although there are a number of variations to this theme (many, including “catch-up” scenarios, listed in the article cited above), the basic idea is this: Contribute $1,000 a year from age zero until the child’s nineteenth birthday and that modest investment will growth to two-and-a-quarter million dollars by the time that child retires at age 70.

Not bad, eh?

Now, I know what you’re thinking: If this is such a great idea, why isn’t everyone doing it?

Well there are two very good reasons why we don’t see Child IRAs blossoming in mutual fund accounts all across this land.

First, not many people know about the Child IRA. Second, and more important, even if people are aware of the Child IRA, they aren’t currently eligible to participate.

Aye, there’s the rub. In order to set up the Child IRA, the child needs to have earned income. While that might be easy for a teenager, it’s nigh impossible for a newborn infant. How can a new baby get a paying job?

Fortunately, the wonderful world of capitalism provides reasonable access to a quick fix to this dilemma. Just turn on your favorite television show (or YouTube video channel) and, if you wait long enough, the answer will reveal itself.

As explained in “How to Take Advantage of The Child IRA Under Current Laws,” (FiduciaryNews.com, July 13, 2016), there is one job a child can do from very nearly the moment he is born: model. Baby models appear in display ads and video commercials. While the pay scale varies by market, it’s not unreasonable to expect a child model to make at least the requisite $1,000 a year needed to contribute to the Child IRA. Job opportunities in top tier markets often feature the added benefit of residuals, meaning the child can earn income in future years based on work done in a past year.

While modeling for third parties is quite competitive and demanding, there is a large market where it would be quite effortless for children to model for: their family’s business. As long as parents and grandparents pass reasonable wages and stay within the application child labor laws, they can hire their own children to model for their business marketing materials. When children grow older, they can assume more traditional duties, as outlined in “Who is Using The Child IRA Right Now,” (FiduciaryNews.com, July 14, 2016).

Naturally, a working child can generate more expenses that may offset any income. As luck would have it, the IRS only requires gross income to qualify for an IRA contribution, not net income.

Therefore, even if the child’s job may create an isolated negative cash flow situation, the parents working arrangements still should net a hefty positive cash flow, making room to use the child’s income to contribute to the Child IRA.

If that means making sacrifices, be mindful such sacrifices aren’t too burdensome. For example, $1,000 a year is equivalent to: dinner for two at a fancy restaurant once a month; or, a fast food meal for a family of four once a week; or, a single cup of Frappuccino once a day.

Who’d have thought you could eat healthier and possibly lose weight at the same time you’re helping your child gain financial independence at retirement.

Instant Insights /

Would you make this sacrifice to help your child retire a multi-millionaire?

More From HR Executive

Related Stories

Recommended For You