It might sound like a fantasy: setting your child up to retire a millionaire. But this isn’t a financial fairytale reserved for the ultra-wealthy. With a little foresight, planning, and discipline, even families with modest incomes can create generational wealth, starting as early as childhood.
The secret isn’t flashy investments or risky bets. It’s consistency, time, and smart use of compound interest. In fact, the earlier the journey begins, the less money is required to reach that seven-figure milestone. So, if you’re wondering how to help your child retire a millionaire, the answer is simple: start now.
Why Time Is the Real Wealth Builder
When most people think of wealth, they think of income. But income alone doesn’t build wealth. Time does. Thanks to the power of compound interest, money invested early has decades to grow and multiply. The difference between starting at age 10 and starting at 30 can mean hundreds of thousands, or even millions, of dollars.
For example, if a parent or guardian invested just $2,000 a year (less than $170/month) from the time a child is 10 years old until they’re 18, and that money earned an average of 7% annually until the child turned 65, the result would be over $1 million.
That’s right: an $18,000 total investment, if started early and left alone, can grow into seven figures without any further contributions. This is the power of starting now.
Open a Custodial Roth IRA (If They Have Earned Income)
If your child is earning money from a part-time job, babysitting, lawn care, or any other legitimate source, you can open a Custodial Roth IRA in their name. Roth IRAs are funded with after-tax dollars, and the money grows tax-free and can be withdrawn tax-free in retirement.
Many people think Roth IRAs are just for adults, but minors with earned income are eligible, too. The parent or guardian manages the account until the child turns 18 (or 21, depending on the state). If your teen earns $3,000 in a summer job, you can contribute up to that amount into their Roth IRA. You can even match their earnings as a parent to encourage the habit of saving. Even small contributions, say $500 a year, add up quickly when started early.
Use a 529 Plan to Free Up Future Income
While a 529 college savings plan is primarily used for education expenses, it can indirectly help your child retire a millionaire. When education is paid for with tax-advantaged savings instead of loans, your child enters adulthood without the burden of student debt.
This freedom allows them to start saving and investing much earlier than their peers who are busy paying off thousands in student loans. By helping with college costs now, you’re giving your child a head start toward building wealth later.
Bonus: Unused 529 plan funds can now be rolled over (up to $35,000) into a Roth IRA for the beneficiary under certain conditions, adding another layer of retirement planning flexibility.
Teach Them Financial Literacy Early
You can set your child up with the right accounts, the right investments, and even seed money, but without financial literacy, that wealth could evaporate later. Teaching kids how to manage money is just as important as giving them money.
Teach them the value of saving, how compound interest works, the dangers of debt, and the importance of budgeting. Encourage reading books, listening to financial podcasts for teens, or playing financial literacy games. The earlier these lessons are internalized, the more confident and capable your child will be when managing their own wealth later.
Even better? Involve them in managing their investments as they get older. Let them watch how their Roth IRA or investment account grows year after year. Financial empowerment is a gift that lasts far beyond childhood.
Make Investing a Family Culture
Children learn by watching, not just by listening. If saving and investing are a normal part of life in your household, they’re more likely to adopt those habits themselves. Talk openly about retirement, compound interest, and the importance of long-term planning. Normalize conversations about money, without shame or fear.
Celebrate milestones. When a family investment grows or a Roth IRA hits its next $1,000 mark, treat it like a win. Show that being smart with money isn’t about being stingy. It’s about building freedom and opportunities.
Consider making “investment gifts” for birthdays or holidays, like contributing to their IRA or buying shares of a company they love. These gestures can shape their perspective about wealth in a way that toys and cash never will.
What If You Can’t Afford to Start Big?
That’s okay. You don’t need to be rich to raise a financially independent child. If you can’t set aside thousands per year, start with what you can. Even $10 or $20 a month matters over time. The key isn’t the size of the contribution. It’s the habit and consistency behind it. What matters more is starting now. Even one extra year of compound growth can make a significant difference in the long run.
And remember: teaching your child financial principles, even without large sums of money, is still a massive gift. A financially literate adult who starts investing early will always be ahead of a high earner who doesn’t understand how to grow their money.
Start Small, Think Big, and Watch It Grow
Ensuring your child retires a millionaire doesn’t require secret knowledge or extreme wealth. It requires starting early, staying consistent, and making intentional choices that prioritize long-term growth over short-term gratification.
By helping them open the right accounts, avoiding debt, teaching money principles, and creating a culture of investing, you’re not just setting them up for financial success. You’re changing the trajectory of their entire life.
Would you consider opening a Roth IRA for your child or gifting them stock instead of toys?
Read More:
12 Small Ways to Save Your Way To 1 Million Dollars
Simple Steps to Financial Independence: How Smart Investing Can Build Your Wealth
Riley is an Arizona native with over nine years of writing experience. From personal finance to travel to digital marketing to pop culture, she’s written about everything under the sun. When she’s not writing, she’s spending her time outside, reading, or cuddling with her two corgis.