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“If you can give your son or daughter only one gift, let it be enthusiasm.” -- Bruce Barton, Advertising Executive, U.S. Congressman. 1886-1967.

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Which is tougher — starting a diet or planning for retirement? Not surprisingly, 30 percent of 1,000 Americans surveyed believe that it’s harder to start planning for their retirement than it is to begin a diet (28 percent). Twenty-three percent of the people surveyed have done no retirement planning. And only 23 percent of Americans at least age 55 have accumulated savings and retirement assets of at least $250,000 (source: Employee Benefit Research Institute).

Let’s look at these facts from a more positive light. My job is to help you become one of the 23 percent who do have significant amounts of accumulated savings and retirement assets. One way to encourage both yourself and the next generation to start planning for retirement is to help a child or grandchild set up an IRA. You can set up an IRA for them while funding yours as long as they have earned income.

In reality the child may have spent what they earned. We can make a gift to our children and grandchildren so they can contribute to the IRA. We can help our children begin saving for retirement –no matter how far in the future it might be.

Wait a minute; aren’t we supposed to fund a 529 education plan? You’re right, an education fund is very important and you can address that as well. One thing I like to remind people of is that there are loans and scholarships for college but not for retirement. Also don’t forget that this isn’t a choice between saving for one or the other. Just starting an IRA account is a great opportunity to teach the younger generation about saving for a long term goal at the same time as saving for the shorter term goal of college expenses.

Recently while preparing a college funding analysis for a client I was reminded of the extremely high cost of higher education. Duke University in Durham North Carolina has a great reputation for both academics and athletics. Who wouldn’t want their children to go to such a high caliber University? The tuition is the same for in-state and out-of-state students at $41,239 a year, which includes room and board. I would hope that my grand-kids are exceptionally gifted and will receive full scholarships!

If a child has earned income, they can set up an IRA and contribute, subject to contract minimums, up to $5,000 (or the amount they earned, if less) for 2008. If your daughter earned $2,000 in 2008 she can put $2,000 into an IRA. If you (or grandparents) give her $2,000, she can use that money for the IRA and keep her own earnings. Remember, however, that you can only give up to $12,000 gift tax-fee — $24,000 if you and your spouse make a joint gift. They have until April 15, 2009 to make the 2008 contribution.

Earnings from a “regular” job (W-2 income) count. But so does income from jobs like cutting the neighbors grass or babysitting. They’ll want to keep records of how much they earned, who their “customer” was and when they were paid. Allowance for chores at home doesn’t count.

Is a traditional IRA or a Roth IRA best? Because the child is most likely in a low tax bracket and won’t benefit from the tax deduction of a traditional IRA, a ROTH IRA may be a better choice. He or she won’t get the tax deduction, but can take out contributions without taxes or penalties at any time. With the traditional IRA they’ll have to wait until age 59 ½ to take out contributions without paying taxes or penalties. . As a bonus, when they wants to buy her first home. As long as she’s had the Roth at least five years, she can take out up to $10,000 of earnings without paying the 10 percent penalty tax. (This is true of a traditional IRA as well).

Of course, this article is no substitute for a careful examination of all of the advantages and disadvantages of this matter in light of your family’s unique personal financial circumstances. Before implementing a financial planning strategy, contact and consult with your Financial Advisor and tax professional.

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Darcie Guerin is a financial adviser and branch manager at Raymond James & Associates Inc. at 606 Bald Eagle Drive, suite 401, Marco Island. Contact her at Darcie.Guerin@raymondjames.com, 389-1041 or toll-free (866) 343-0882.