I’m Really Behind on Retirement. My 12-Year-Old Might Be Able to Help.

Pay Dirt Photo illustration by Slate. Photo by Paperkites/Getty Images Plus. Pay Dirt is Slate’s money advice column. Have a question? Send it to Kristin and Ilyce here. (It’s anonymous!) Dear Pay Dirt, I’m a 48-year-old mom of a 12-year-old son. He was fortunate to receive a modest inheritance from a relative when he was a baby. With market gains, he now has about $135,000 in a taxable brokerage account in my name, informally earmarked for college (I didn’t open a 529 because I’m unsure he’ll go to college in the U.S.). If I leave it alone, I expect he’ll have around $200,000 when he’s 18. However, I’m behind on my own retirement savings. I’m self-employed, have about $225,000 saved, and I’ve been struggling the past year to add to my Roth IRA due to some medical expenses and dips in my income. Assuming my income stays at a rate that makes saving for retirement challenging (which I hope it doesn’t, but it’s unpredictable), does it make sense for me to max out my Roth IRA with money from my son’s account until he’s college bound, both to spread out potential capital gains tax on withdrawals, and to “put on my own oxygen mask first” with a better funded retirement account? —Ahead on College, Behind on Retirement Dear Ahead and Behind, Was this inheritance intended for his future, or was it a gift to help you with the costs of raising a child? It sounds like the former, in which case, using it for your retirement might have benefits, but you may want to consider the ethics, not just the logistics. Not everyone goes to college, but there are plenty of other scenarios in which that money might be useful to him in the future, whatever path he decides to take in life. That said, there is a case to be made for strengthening your own retirement because it could ultimately help your son financially more than keeping it in a taxable investment account—that oxygen mask you mentioned. Plus, I’m guessing your own retirement has probably taken a hit because you’ve spent years paying for childcare, lessons, activities, camp—the list goes on. One could argue that once your retirement is secured, you’d be in a better financial position to help him down the road, whatever path he decides to take. Still, the future is always uncertain and you never know what might happen to that money. Right now, it’s earmarked for him, and if he ever learns that his inheritance was used to cover your own retirement, he might feel a certain way about it. That could create more problems down the road. Let’s talk logistics, though. Yes, there are tax advantages to putting the money in your Roth IRA. Namely, moving money from a taxable account to the Roth converts future taxable growth into tax-free growth. Just keep in mind that if you sell the investments in the taxable brokerage account to do this, you’ll likely have to pay capital gains tax now. If it’s the taxable brokerage account that’s tripping you up (you want the tax advantages that other types of accounts offer) maybe rethink the 529. Yes, it’s designed for higher education, but that can cover all sorts of expenses, like trade school, apprenticeships, and even K-12 tuition. And even if your son doesn’t use it for any of those things, he can still take out the money, it’s just that the earnings (not the contributions themselves) would be subject to a 10 percent penalty, because of the tax-free growth. And at some point, some of the unused funds in a 529 can be rolled over into a Roth IRA for your son. If you do decide to use your son’s inheritance to fund your retirement, talk to a Certified Financial Planner to get ahead of any tax consequences, record‑keeping requirements, or legal questions about using funds that were originally intended for someone else. —Kristin Please keep questions short (<150 words), and don‘t submit the same question to multiple columns. We are unable to edit or remove questions after publication. Use pseudonyms to maintain anonymity. Your submission may be used in other Slate advice columns and may be edited for publication. Classic Prudie My wife and I have been married for 25 years, and for 24.5 of those years I was unfaithful. She never knew about it; I even missed the birth of our first child because I was in Paris with one of my then-mistresses (I lied and said I was on a business trip). Well, six months ago, a shocking surprise changed everything. Never miss new Slate Advice columns Get the latest from Prudie and our columnists in your inbox each weekday, plus special bonus letters on Saturdays. Advice Personal Finance Retirement