Saving money can be rather difficult as extraneous expenses seem to pop up out of nowhere. For many, putting money aside when it could be used in the present moment just doesn’t make sense.
However, we want to encourage you to think about retirement. After all, you’ve worked hard. When it comes time for you to retire, you want your money to work hard for you.
Tax Day has come and gone, and if you’re expecting a tax return check in the mail, you’ll want to keep reading this blog for some helpful tips on how to use that extra cash for retirement.
For many, retirement seems like an unattainable life event and that we’re saving and saving all while being worried that we won’t get anything in return. Don’t let this mindset derail you from putting money into your retirement.
In fact, Robert Semrad, a senior partner at DebtStoppers, says that many people aren’t saving enough for retirement. That’s why your tax refund check can be an easy way to add more money into your retirement fund without having to dig into your pockets.
Since finances can be rather confusing, we’re going to provide three general ideas on how to reinvest your tax return check.
- According to IRS Form 8888, you can directly deposit your tax return into two or three accounts, including a traditional IRA, Roth IRA, SEP-IRA or myRA. Doing so will help you avoid pocketing the money and spending it on other things. Rather, you’ll take an “out of sight, out of mind” mentality and the money will go straight to your retirement fund.
- Add it to a 529 college savings plan for your kids. Sure, it’s not going to your retirement—but it will greatly reduce the financial burden that comes with sending your children to college. In the future, you won’t have to scramble for money that could be going toward retirement.
- Put it towards a low-risk investment, such as savings bonds, a CD, or a money market fund. This is a great option if you’re closer to retirement because you have less of a chance of losing your money. These options keep your money out of sight, but it’s still gaining interest.
- Schedule an appointment with a financial advisor who will help you map out a course of action and provide you will insights on how to invest your money in the smartest, most beneficial way possible.
If you’re patiently waiting for a tax return check in the mail this year, keep these tips in mind as your prepare for your future.