Your Tax Return & Your Retirement
This years tax deadline is behind us. If you received a refund, what’s your plan?
Some taxpayers choose to spend the entire check on clothing, shoes, and their appearance. They never look into investing their money for their own personal future. In a sense, you may be temporarily happy about your purchases or your new hairstyle, but in the future, you may regret not investing some of the money in an account or investment.
Let’s take a look with those that have a 401(k) plan. Most employers match their employees with a certain percentage in their 401(k), which is a great incentive for you. This may be a great time of year to open a 401(k) account or take a look at your refund and average the refund over the remainder of the year to offset additional contributions to your 401(k). Remember, the percentage that your employer will put into your account will not change unless they specified a change after a certain amount of time. According to the Internal Revenue Service, the average tax refund is over $3000. The only amount that you will need to open your Regular 401k is up to $50. However, if you choose to open a Solo 401(k), you don't have to have a certain amount to open it. A Solo 401(k) is great for single people who have no children. In case there is an emergency that takes place in their life, they can have the option of using a Solo 401(k).
There are many other options for your tax refund, those options are:
Invest in a healthcare savings account
Paying off school loans
Emergency savings account
Start an IRA
These options will help you with lowering your debt and being prepared for those unexpected situations. If you are thinking of a healthcare savings plan, you can go to your local bank and learn about what it takes to open that type of account. You can also use your tax refund to deposit into a healthcare savings account every year. These funds are used in case you have a medical emergency that needs to be taken care of right away, such as a broken bone, a fractured ankle, or a broken hand. When emergencies like that occur, your physician will let you know the cost. If your health insurance doesn't cover the cost of the procedure, you can use your healthcare savings account. The greatest asset to opening this type of account is that you won't be taxed for using it. When you reach an elderly age, you can use the money for glasses or hearing aids. You won't have to pay out-of-pocket if you have invested in this type of account for a while.
The greatest feeling always happens when you have prepared yourself for retirement. Whether you decide to open an extra account for emergency funds or an IRA, you have made a step toward having the best future. That's genuinely a lot to be proud of.
We are here to help you plan for your retirement years, contact us today to see what plan we can create for you.
Advisory services offered through Meridian Wealth Management LLC, a Registered Investment Advisor. For more information, please visit our website www.meridianwealthllc.com.
Copyright, 2019, https://money.usnews.com/money/retirement/iras/articles/how-to-use-your-tax-refund-toward-retirement, US News and World Report
Copyright, 2004-2019, https://www.biggerpockets.com/forums/51/topics/416332-minimum-amount-to-open-a-solo-401k, BiggerPockets