David Lerner Associates: What to Do With Your Tax Refund

Forty-eight million Americans have already received a tax refund from the federal government this year. As tax time approaches, millions more are thinking about what to do with this windfall when it arrives. The latest Bankrate Money Pulse survey shows that there have been some significant changes in what Americans are planning to do with this money this year.

• Invest the money – 31% (down from 33% last year)
• Pay down debt – 28% (down from 34% last year)
• Splurge on a vacation or a shopping spree – 6% (double last year’s figure of 3%)

Millennials and retirees are more inclined to save and invest their refunds, as are higher earners. The majority of people who plan to pay down debt earn between $50,000 and $74,999 a year. Collection agencies make the most of tax refund time too, and they will be aggressive in their attempts to clear old balances.

Tips on What to Do With Your Refund

• Start or build up an emergency fund. Three out of 10 American have no emergency savings, and financial experts recommend that it’s wise to have six months of expenses put away, so that if you are hit with a large expense or sudden life emergency, you’ll be able to weather it. Check out savings rates, and find the best place to put your refund money. Rates are around one percent, but it pays to compare rates when you’re ready to put the money away.
• Pay off debt. 38.1% of all households carry some sort of credit card debt. Use the refund to get rid of credit cards with a high interest rate.
• Save for retirement. 41% of households approaching retirement have no savings at all. [6] Although retirement may seem a long way off, it pays to start early. The longer you have to save and invest the better. Speak to an investment advisor who has experience in putting together retirement plans using the sensible middle-ground of investing.

IMPORTANT DISCLOSURES

Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.

Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC