What do you plan to do with your tax refund this year? Here are three suggestions that could net you long-term benefits:
- Reduce Your Debt: If you have credit card bills or other consumer debt hanging over your head, consider putting your tax refund to work by using it to pay down those debts. Not only will this reduce your current monthly bills and free up some cash, getting out of debt and staying out of debt can put you in a better position when the time comes to retire.
- Pay Down Your Mortgage: There’s been a long-standing debate concerning whether it’s better to pay off your mortgage prior to retiring, or to invest money toward a retirement income that can help you cover your total living expenses – including your mortgage – once you leave the workforce. If your goal is to retire mortgage-free, your tax refund can be a great way to start chipping away at your outstanding loan balance.
- 3. Build Your IRA: If you don’t have high-interest debt to worry about, consider getting a jump on your 2011 IRA contribution. If you have a traditional IRA, your contribution will likely count as a deduction on next year’s tax return. With a Roth IRA, your contribution won’t qualify as a deduction, but it will be allowed to grow, tax-free until you’re ready to retire.
For more insights on saving for retirement – and for coordinating your retirement planning with your estate planning – you can speak to your estate planning attorney.
Mr. Stephen Mendel is an attorney who focuses a substantial part of his practice on estate planning. Mr. Mendel’s guiding principle is to provide his clients with quality legal services tailored to each client’s specific needs and goals.
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