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Use Tax Refunds to Help Save Money for Retirement [Worksheets]
March 7, 2018
If you anticipate a state or federal tax refund, do you already have plans for it? According to a recent TD Ameritrade survey,1 61% of Americans who expect a tax refund plan to save or invest it. Another 21% plan to pay off debt.
Here's another important fact. Did you know that the tax filing deadline is the same date that you can receive tax deductions for regular individual retirement account (IRA) contributions?
If you were fortunate enough to receive a year-end or salary bonus, how about using some of that extra cash as another way to bolster your retirement savings?
Most of us can expect to live 20 or more years in retirement. Putting some "extra" cash (tax refund or bonus) toward your savings now can help you build your nest egg. Putting a set dollar amount away on a regular basis makes saving even easier. And why not pay yourself first with your refund or bonus?
In addition, having a good idea of how long you’ll live – which will determine how much you'll need – will put you ahead of most folks. Some considerations that are often overlooked and can negatively impact retirement savings are:
- Market fluctuations.
- Rising health care costs.
- The future of Social Security.
Financial action tips that you can use
Start paying yourself first and check out some of these tips and tools to help you get a better idea of where you’re going with your retirement savings.
- Use our life expectancy worksheet (PDF) to calculate how many years you may need to plan for.
- Take a risk tolerance quiz (PDF) to get a better idea of how much risk to take with your investments and still be able to sleep at night.
- How much do you need to save? Check out our Retirement Planning calculator and see where you stand.
- Talk to your financial professional to discuss your retirement vision and next steps. Contact your local Thrivent Financial representative.
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1TD Ameritrade survey, published February 2014.