Students on Assisted Roths program aims to help save for retirement

Renee Pearce entered the room, bouncing down the steps past about 25 college students with a bundle of “Happy Retirement” balloons in hand shouting “Happy S.O.A.R. day!”

Pearce, senior accounting and computer information systems major and president of the Accounting Association at Kent State, is the planner for the S.O.A.R. program, or the Students on Assisted Roths program, which had their “grand opening” meeting yesterday afternoon.

Roth individual retirement accounts, enacted in 1998 and named after Senator William Roth, are long-term, tax-free savings plans for retirement overlooked by many young workers.

The aim of the meeting was to get students to open Roth IRA’s because they have time on their side. They can contribute funds to their Roth IRA to grow tax-free for years until they decide to start making withdrawals.

For example, if a 20-year-old student contributes $125 a month to their Roth IRA with a 7.5 percent return rate, by the time they reach age 65 they will have accumulated about $514,000.

“Money picks up speed,” said Don McFall, faculty adviser for Beta Alpha Psi, Kent State’s Business Organization, which sponsored the event. “The longer you keep it, it’s like rolling a snowball down a hill, it’s going to go faster and pick up more money.”

Chelsey Leas, senior accounting major and community service chair for Beta Alpha Psi, was the first member of the organization to open a Roth account.

“It’s just an easy way to have a huge chunk of money when you retire,” Leas said.

Leas said it’s important for students to start thinking about IRA’s to avoid any financial mistakes made by older generations.

“Older Americans now, they don’t have any money saved up,” Leas said. “So I think it’s what’s going to make our generation that much more financially aware.”

Robert “Yank” Heisler, dean of the College of Business, agrees.

“The process of beginning this now is very important, but even to the next step, this may allow all of you to do something your parents would love to have done,” Heisler said.

Kent State students can open a Roth IRA with the Kent Credit Union for $5. S.O.A.R. will then match a student’s first contribution to their account up to $50.

S.O.A.R. has six sponsors so far, including Grant Thorton LLP, Smuckers, and Deloitte.

Emily Jett, campus recruiter for Deloitte, said she wishes she were young again so she could participate in the S.O.A.R. program.

“I think it’s a great program. We’re thrilled,” Jett said. “It’s taking that aspect of financial literacy one step further and putting it into action.”

While Linda Zucca, chair of the accounting department, wasn’t able to open a Roth IRA account in her 20s, she opened accounts for her own children when they were 16 after starting their summer jobs.

“It’s a good habit to get into because, over time, those monies will grow into a nice retirement fund,” Zucca said.

Mike Murphy, president of Beta Alpha Psi, also said budgeting will make it easier to find that money to contribute.

“If you just write down all of your expenses and your income for the month, you can really see where your money is going and where you can make adjustments,” Murphy said.

Joseph Crawfis, CEO of Kent Credit Union, said opening a Roth IRA account will also decrease any tax-related stress as retirement approaches.

“If you can invest money now and then have it grow over time tax-free and then take it out when you retire, tax-free, that’s a great option,” Crawfis said. “That really does lower your tax burden during retirement.”

Zucca said not to worry about how much students can contribute to their Roth IRA’s.

“Even $5 a week or $5 a pay period, it’s the habit and thinking about putting money away,” Zucca said. “Even if it’s a very small amount, it can make a difference over time.”

Contact student finance reporter Kristyn Soltis at [email protected].