Retire: Teenagers should know how

In Latest, Retire by Carina Jooste

dividend rockstarsA relative is helping her 12-year old set up his own business. They’ve identified their market, purchased a domain name for a website and agreed on a simple business plan.

The most interesting part of this conversation is what the 12-year old must do with the profits gained. 25% can be spent on whatever he wants, 25% goes towards his gap year fund and 50% towards his tax-free savings account (TFSA). When he questioned why he should save such a big portion, his mother mentioned a couple of solid reasons – one being retirement. 

Her advice to him is not to start saving for retirement, but to get into the habit of saving. I don’t know how much information he retained, or if saving for something he will only need in 60 years’ time made any sense to him. But just by mentioning that he should save for his future self is probably the best advice this trucker cap wearing teenager will get in his life. 

Let the penny drop while they’re still young

Every piece of retirement market research, local and international, highlights an overwhelming sense of regret amongst retirees of starting too late. This doesn’t mean that 15% of your child’s pocket money should be invested in a retirement annuity (RA). Simply make them aware of the concept of saving for retirement. Make it part of your conversations about money, so that one day, when they earn their first salary, they know how they should manage it from day one.  

Slice the cake together

Explain your household budget to your child. Show them how much money goes to what’s needed today, and how much you’re saving for tomorrow. Importantly, it’s not about how much money you have available to spend and save, it’s about teaching your children to manage their money well.

The tortoise and the hare 

The slow and steady pace of the tortoise is the perfect analogy for explaining the value of a disciplined savings journey to a child. Easy, consistent steps will get them to their savings goal, whether they’re saving for a new phone, a gap year or an early retirement.

The magic of compound interest 

The potential of compound interest still blows my mind. By explaining the very basics of this money-making phenomenon to your teenager is bound to blow their mind as well. 

The essence of good retirement planning is quite simple: start saving well in advance. And if you’re a parent, start having the right conversations with your children well in advance.


Saving for retirement is the biggest investment most of us will ever make. Sadly, it can also be very complicated. In this monthly blog, we try to answer some of the retirement questions we hear most often, ranging from which products are best suited to different circumstances to efficient tax treatments. Words by Carina Jooste.


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