Guidant Financial Group Blog

The tables have turned. Remember when we were saving for our kids’ college education? Well, now we are saving for their retirement.

Gosh, do parents have to do everything?

Unfortunately, in these (and future) economic times, we may have to. The fact of the matter is that there is no guarantee that social security will be around when our children and our grandchildren are ready to retire. Further, there is no guarantee that the securities market will yield the same rate of return for future generations as it has for past ones.

It is no wonder that parents and grandparents are now considering putting aside funds for their children and grandchildren’s retirements, just as they would for their college education.

An article on NuWireInvestor.com last month introduced a revolutionary savings tool called the KissTrust (see KissTrust: Give the Gift of Savings). From what we can gather, the KissTrust is like a savings bond on steroids, which touts the ability to grow to as much as $1.3 million by the time the beneficiary reaches age 65.

Like other savings vehicles, the KissTrust relies on the movement of the securities market for any returns. Yet if the trust is opened at the time of the beneficiary’s birth, it potentially has as much as 65 years to mature – that’s 65 years of compounded interest. You do the math.

Furthermore, unlike other trusts and annuities, the KissTrust can be designed with various provisions in place. This way, the beneficiary cannot access the funds until retirement age or until he/she meets whichever provisions the donor has established (i.e., to use the funds to pay for college or the purchase of a first home).

Although we are sure there are nuances to this kind of account that are not self-evident on the website or in the article, the idea is a novel one. And, on the surface, it sure seems like a good one!

For more information on other savings vehicles for children, see our June 17 blog, Raise Financially Savvy Kids.