Use Your Tax Refund To Grow Your Nest Egg

According to the Internal Revenue Service, the average tax refund for 2015 was $3,120. It is forecasted that the average tax refund will be even higher for 2016.1 Continual increases in tax refund amounts indicates that many individuals are paying the government money that they could have benefited from throughout the year if their finances had been in order.

The optimal situation is to not owe money at the end of the year nor to receive a refund. Better to set it aside for yourself than give the government an interest-free loan. If you happen to receive a tax refund, invest it in your nest egg. See our article, Plan for More Gold in Your Golden Years: Goals Involving Asset Decumulation.

If you received the average refund of $3,191 in 2010 and invested it for five years at  a 6% average annualized return, you would have $4,270 in that investment account today. If you were to continue to receive the average annual tax refund and invest it wisely, you will see your nest egg grow. By adding $3,191 per year for 20 years and a total of $67,011 of invested tax refunds, you will have doubled your amount to approximately $134,660.2

Another option for investing your refund is to pay down your home mortgage. If you haven’t paid your mortgage off yet, be sure to do so before you retire. Owning your home, mortgage-free, will allow you to breathe easier while living a more secure and comfortable retirement. If you have credit card debt, eliminate that first.


For help getting your finances in order and planning to stretch your retirement dollars, contact us today.




1. Tax Refunds Reach Almost $125 Billion Mark; Available for Tax Help. Feb. 26, 2015.

2. 9 Smart Ways to Spend Your Tax Refund. Dayana Yochim. Jan. 6, 2016.


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