Your Refund: Invest In Your Retirement

BOSTON (CBS) - No one has ever been guilty of saving too much money for retirement or starting too early!

Most young workers today put off retirement planning because the goal seems so far away. At age 25, something that will happen to you in 42 years is a life time away.

So, consider taking that refund and investing it in your future. Increase your contribution to your retirement plan at work by the amount of the refund. Then use those refund dollars to make up the lost income over the remainder of the year.

If you don't have a retirement plan at work consider using an IRA for retirement savings. The IRS allows direct deposit for your refunds, permitting you to divide your refund among up to three accounts.

Use the IRS' form 8888 to make it really easy. Just fill it out when you file your taxes and the IRS will send the money directly to your IRA.

You can contribute up to $5,500 this year and if you are over 50 there is a catch up provision and you can add an extra $1,000.

A $3,000 addition to your retirement account at age 40, assuming a 7% return by the time you're 67 it could be worth almost $19,000, do that every year for the next 27 years and you could have an additional $225,000 in your nest egg.

If you are 25 and invest your refund every year until you are 67 you could have close to $700,000 in your retirement plan.

A listener wanted to know where he could get a 7% return. I can't promise you a guaranteed 7% return but consider investing in a balanced mutual fund, which is invested in stocks and bonds.

Fidelity's Puritan fund which is a balanced mutual fund comprised of stocks and bonds has had only 14 down years since 1948 and 54 positive years. Life time average return was almost 11%.

Fidelity's Balanced fund has had only 4 down years in 30 years. Average return over 9%. Not every year, but the average.

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You can hear Dee Lee's expert financial advice on WBZ NewsRadio 1030 each weekday at 1:55 p.m., 3:55 p.m., and 7:55 p.m.

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