Matching retirement contributions

[Wille]

DW and I are retired. We would like to help our 20-something children open and start to build up retirement accounts. We plan to match their contributions. Any lessons learned or tips on do's and don'ts for this?

 

[latexman]

I'd set an upper limit. If they work up to saving 15%-ish, they probably don't need your help. Maybe a sliding scale, like child's % + DD's % = 15%.

 

[Golden sunsets]

I agree with latexman, regarding setting an upper limit. I also would contribute to their retirement funds only as long as they are doing the same. If they are(say contributing to a 401K), then you could fund their tIRA or RothIRA annually. If the are contributing to a 401K, but not enough to at least get the full company match, then you might subsidize their biweekly takehome to their checking account, with an auto deposit, so that they could bump up their contribution enough to get the full company match.

 

[JDARNELL]

While my kids are in Hs and college we do march what they make in a Roth IRA. They are required to save 30% of what they make each month in a taxable account. Oldest son will be exiting college in the next year. My goal is for when he graduates is to be debt free have 6 months living expenses saved a good start on a retirement account and be able to contribute 10-15% into his organizational 401k. If he can do this after a couple of years we will start gifting him more money to see how he handles large amounts as a trial run for inheritance one day. Plan on doing the same with number two son. My kids work don’t ask for anything and IMO are making the necessary steps towards being productive members of society. As long as they are doing what they are doing we help out.

 

[HarveyS]

Good idea. I match my HS and college kids Roth, and pay a 6% dividend in the "bank of Dad" savings account they have. This is just a checkbook register that they deposit babysitting, gifts, etc. funds in. The actual funds go into my account. I pay the dividend on 1/1 every year.
Be careful not to penalize a saver. If child 1 saves 10% and you gift 5%, great. But if child 2 saves 15% would you gift 0%?
I'm a fan of equal gifting to avoid bad feelings. Also, you need to balance are you making a gift, or are you trying to control them? Sounds like a gift to me, but how will they (and spouses) see it?

 

[latexman]

If child 1 saves 10% and you gift 5%, great. But if child 2 saves 15% would you gift 0%?

I see what you mean. It's complicated further because, at the end of the day, they will share whatever is left equally. To wean them off when they get to 15% was a way to ensure the legacy was intact.