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Why 12 Years Old is Not Too Young To Start Planning For Retirement

According to CNBC, the average age of retirement is currently about 62 years old. 

Now, what if we told you that your child could start planning for retirement roughly 50 years before they actually work their last day on the job? 

pink piggy bank

Okay, so we’d understand if you’re calling us crazy and click off this blog but we promise you it’ll be worth your time if you keep reading.  

In today’s blog, we’re going to talk about why twelve years old is not too young to start planning and saving for retirement. 

Although we may tend to consider twelve years of age too young to start earning money, your child’s early teen years are actually a great time for them to start accumulating income that they can then put towards an RRSP. 

Whether this income is earned by mowing lawns, babysitting, starting an online small business or helping out with your family business, your child can start establishing RRSP room immediately provided that the money is earned legitimately (an allowance does not count, for instance, and a record of income must be officially established in order for this RRSP-building process to begin).

blue piggy bank

The sooner that money is contributed into an RRSP, much like what is true of any account where money is stored for growth, the sooner it can start growing and compounding. In other words, if there is a way for your child to make a simple and legitimate income at the age of twelve or thirteen, there is no reason that they cannot or should not be taking that money and starting to create RRSP room with it, thereby helping them save and plan for their post-working life future in retirement. 

Think about it this way. Money accumulated through investments allows the investor to start thinking about their next investment and look further down the road on their investment “journey”. In much the same way, money accumulated for an RRSP at the age of twelve or thirteen can open the door for your child to begin thinking about and looking towards the future, providing an opportunity to start retirement planning as a result of their ability to begin contributing to their retirement plan at such an early life stage.

Put more simply to conclude this blog on a more simplified note, the reason twelve years old is not too early to start retirement planning is simply because this age is when your child can start financially contributing to their retirement future and that is the first real step towards planning for retirement no matter when your child eventually decides they are ready to stop working.   

pink piggy bank

We hope that this blog has shined more light on the real important lesson here: kids can start rather easily saving money for retirement very early on in their teenage years. In fact, we would advise employing this tactic for the simple reason that doing so will simplify and ease your child’s path towards a smooth and easy retirement in their later years.

We hope that the information you’ve read in this blog will benefit you as the parent of a young teenager but if you’d like to give your high-school-aged child an even better head start with learning important money lessons like these, we encourage you to check out Explorer Hop’s personal finance programs today. 

In these programs, we have courses for kids in high school and classes designed for children as young as first grade to give them the tools they need to accelerate their understanding of financial concepts that will help them immensely in the future.

Disclaimer: Explorer Hop cannot be held liable if your child takes one of our classes then starts taking over the parent role by teaching you some lessons about saving and budgeting your money. However, we also know that you’re willing to do whatever it takes to set your kid up well for what they will face as they progress towards future financial independence, so please check out our website for our many financial literacy programs today!

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