That compares with 23% of those ages 37 to 52 who plan to save or invest their refund cash. Some say young adults are striving to be financially savvy.Ībout 39% of millennials who will receive a tax refund or already received one this season said they plan to save the money or invest it, according to. Millennials - broadly defined here as young adults 36 and under - may be more likely to want to save or invest their tax refunds, according to a report on tax refunds. It' s partly because of that flexibility. Maura Cassidy, vice president of retirement products for Fidelity Investments, said twice as many Roth IRAs are being opened compared to traditional IRAs overall by Fidelity's millennial customers.
If you have a traditional IRA, you can avoid a 10% penalty if you take money out for a first-time home purchase, but you could face regular income taxes on the withdrawal. You'd need to have that Roth account in place for at least five years. With a Roth, for example, it's possible to withdraw up to $10,000 for a qualified first-time home buyer and not pay any tax or penalty on the withdrawal. Sure, it's never a bad idea to use a tax refund to pay down expensive credit card debt or deal with other big bills.īut saving for retirement should be viewed as kind of a routine maintenance bill that you need to figure out how to handle early in the game.įor millennials, one advantage of the Roth IRA is it does have more flexibility than some retirement savings options.
It's a decent chunk of cash for someone who is looking to save money for retirement. The average tax refund issued so far this year is $2,897 - up 1.1% from the same time last year, according to Internal Revenue Service data through March 25. Many times when a little extra cash is on the way - say when you're expecting an income tax refund - it's fun to mentally plan a getaway or think of where to splurge on a special dinner out.
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