Tax time presents a unique opportunity for Americans to jump start their savings.
- The national savings rate is currently just below one percent.
- This month an estimated $140 billion in refunds will reach about 45 million people’s pockets. (1)
- However only 25 percent of taxpayers plan to put at least a portion of their tax refund toward savings. (2)
Many families are only one unexpected car repair, illness or job loss away from exhausting any savings they may have.
- An estimated 40 percent of working households do not have enough money saved to meet the majority of their expenses for a single month. (3)
- 39 percent of people feel that having the savings to deal with unexpected expenses or emergencies is one of their most important financial goals. (4)
- About half of households say they couldn’t find $2,000 in 30 days to pay for an emergency. (5)
Consumers have concerns about their future financial stability.
- 55 percent of Americans are concerned that they won’t have enough money to retire. (4)
- 31 percent aren’t sure what is better for their financial situation – paying off debt or trying to save money. (4)
- 43 percent of individuals state that they are actively trying to change their spending and saving habits, but can’t seem to get ahead. (4)
- 39 percent agree that managing their finances stresses them out. (4)
- Only a minority of households have as much saved as they want. (6)
With the average tax refund almost $3,000 (8), lower-income households have the opportunity to save.
- The average tax refund is almost double the $1,500 or less that is typically in lower-income households’ checking and savings accounts. (7)
- It is recommend that families put at least 30 percent of their tax refund into savings.
- American Tax & Financial Center at TurboTax estimate based on IRS data from TY10, TY11
- TurboTax Research 2012
- Shapiro, T., Oliver, M., & Meschede, T. (2009). The Asset Security and Opportunity Index. Institute for Assets and Social Policy.
- Intuit Market Research Survey, 2011
- Lusardi, A., Schneider, D., & Tufano, P. (2011). Financially Fragile Households: Evidence and Implications.Brookings Institution.
- Bricker, J., Bucks, B., Kennickell, A., Mach, T., & Moore, K. (2011). Surveying the Aftermath of the Storm: Changes in Family Finances from 2007 to 2009. Federal Reserve Board of Governors.
- Bricker, J., Kennickell, A., Moore, K., & Sabelhaus, J. (2012). Changes in Family Finances from 2007 to 2010: Evidence from the Survey of Consumer Finances. Federal Reserve Board of Governors.
- Average federal tax refund amount, Internal Revenue Service TY11