Invest That Tax Refund In Your Retirement

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420x316-grad-lee Dee Lee
Dee Lee is a Certified Financial Planner who received a diploma in...
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BOSTON (CBS) – No one has ever been guilty of saving too much money for retirement! So if you use your refund to do some retirement planning you will be so ahead of the curve!

Workers put off retirement planning because the goal seems so far away. Ask any Baby Boomer what would they have done differently and they will tell you they should have started when they were younger and saved more. I have never met anyone who had saved too much for retirement.

So consider taking that refund and investing it in your future. Increase your contribution to your retirement plan at work by the amount of the refund. Then use those refund dollars to make up the lost income over the remainder of the year.

If you don’t have a retirement plan at work consider using an IRA for retirement savings. If there is no plan at work your IRA will be deductible.

I talked about a program on Monday Save Your Refund. They suggest using The IRS form 8888 to make it really easy. Just fill it out when you file your taxes and the IRS will send the money to your IRA.

You can contribute up to $5,500 this year and if you are over 50 there is a catch up provision and you can add an extra $1,000 to the account.

Consider starting a Roth IRA with the tax refund. Limits are the same for all IRAs. But with a Roth IRA there is no upfront deduction. But when you withdraw the earnings in retirement there will be no income taxes due.

Think about your spouse. An at-home spouse can use the refund to open a Spousal IRA. This is an IRA funded for a spouse with little or no income by a spouse with income. The combined income of the spouses must be at least equal to the amount contributed.

A $3,000 addition to your retirement account at age 40, assuming a 8% return by the time you’re 67, could be worth almost $24,000. Do that every year for the next 27 years and you could have over a quarter of a million dollars ($286,000) in your nest egg.

One more thing:

ACTIVE MILITARY MEMBERS, VETERANS AND THEIR FAMILIES
Operation Money Wise Is Designed for Those with Military Backgrounds

The state’s Office of Financial Literacy announced that registration is open for an upcoming “Money Conference” geared specifically toward veterans, active military members, and their families.  The Conference will commence at 8:00 a.m. on Saturday, March 22nd in McKenzie Auditorium at Massachusetts Bay Community College in Wellesley.

The free first-ever Conference, dubbed Operation Money Wise, will provide instruction on matters such as how to sharpen spending and saving skills, how to protect assets from predatory lending practices, and what financial tools and benefits are available to service members and veterans.  State officials said that, particularly given the complexity of the military benefit system, some veterans and service members might not take advantage of the financial benefits available to them or might expect to receive a benefit for which they don’t qualify.

The event is jointly sponsored by Massachusetts Department of Veterans’ Services, the Massachusetts National Guard, and the Financial Literacy Trust Fund.

A free continental breakfast and box lunch will be made available to people attending the Conference.  For more information and to register, interested parties can visit www.mass.gov/treasury/operationmoneywise or call (617) 367-9333 Ext. 615.

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