This week, an enterprising 11-year-old took on his biggest job to date: he mowed the Rose Garden at the White House. Frank "FX" Giaccio wrote to the president earlier this summer offering his lawn care services, which include a full menu of yard-grooming options. He even volunteered to bring his own gas and equipment. "I'd like to show the nation what young people like me are ready for," the letter said.
FX's offer made it all the way to the Oval Office, impressing President Trump enough to invite him to spend the day on the White House grounds with groundskeepers.
This industrious young man, who has been grooming neighborhood lawns for some time now, already has an opportunity to retire a millionaire--if he learns how to manage his money right. According to Chris Carosa, author of the upcoming book, "From Cradle to Retirement," parents need only to save $1,000 a year from the moment a baby is born until that baby's 19th birthday for their child to retire with $2.25 million in investment monies. That's $83.33 each month. It sounds almost too easy to be true, and according to Carosa, this is a low-ball estimate. "This calculation assumes an average return of eight percent, which is three percent less than historical returns," says Carosa. "If you managed to get the historical return, the value at age 70 would be $14 million."
It may sound crazy to start saving for their retirement before your child can even sit up on her own, but this is a real thing. Most, but not all, financial institutions offer so-called "Custodial," "Guardian," or "Minor Child" IRAs, which can be opened only by a parent or guardian. However, the minor child is required to earn income before a contribution can be made to the Child IRA, only a minor hurdle.
While child labor laws, both on the federal and state level, prohibit children below the age of 16 (and sometimes 14) from being hired, it does not preclude a child from earning money. She can mow lawns like Frank "FX" Giaccio does. There's also the classic lemonade stand, and small jobs like babysitter, life guard, or house plant waterer. "You need to make sure it's done in a way that's consistent with state and federal laws," says Carosa. "Usually parental consent is enough for these types of jobs."
There's good news for family-owned businesses; you definitely have an advantage here. Child labor laws do not come into play in family owned businesses if your child's job responsibilities are not hazardous. Youngsters can stuff envelopes, sweep floors, and some can even run your social media campaigns.
Best of all, you can put a child as young as six months to work as a model for your ad campaigns and marketing materials. According to Carosa, you may pay your sweet-faced kid the going rate for modeling in your location. In some areas of California, that can be as much as $5000. More typically, rates range from $50 to $75 an hour.
Your business does not have to be a full-time endeavor to qualify for the family owned business exemption. Even a side-hustle, like networking marketing, or part time virtual assistant work qualifies an employment opportunity for your child, as long as you file a tax return.
Is it fair and logical to ask an 11-year-old to invest all his earnings into a retirement plan? In many cases, the income earned by the child is spent by the child and the parents then gift the amount contributed. "This amount may not be greater than the actual earned income, and the maximum amount you can invest into the Child IRA is $5500 per year," says Carosa. Imagine the amount of stress that would have been taken removed from your life if there were millions adding up awaiting your retirement. Who wouldn't want that for a child of their own?