American Consequences - October 2017

you $1,000 (the maximum) in cash back. If you’ve got a college student or other low- earner in your family, consider helping them make a contribution. 5. SWITCH TO A CREDIT UNION. Credit unions often pay the best rates on savings accounts – like money-market accounts and certificates of deposit. And they keep your money away from Wall Street. Credit unions are nonprofit companies that act as local community banks. If you’re tired of being abused by your big bank, move to a credit union. You can find a credit union near you with . Remember that ultimately, how much you save will be the difference between a lifetime of poverty... or one of wealth. With two 401(k)s and two IRAs, a married couple interested in saving aggressively can save $46,000 a year without paying income taxes. That’s a savings of tens of thousands of dollars of money that you earned and you get to keep, and that you can spend later in life on whatever you’d like. And by investing that money, you can compound your earnings quickly. Before you know it, you’ll have wealth and riches to enjoy in your retirement days. If you have someone that you care about, please forward this issue of American Consequences to them immediately or send them to subscribe.html . Encourage them to start saving today. The math is undeniable.

3. OPEN AN IRA. It’s just as easy as opening any other brokerage account. When registering, you simply select IRA as the account type. When you file your taxes at the end of the year, the forms include a line to enter any IRA contributions. It’s as simple as that. And it will save you tens of thousands of dollars over just a decade or two of retirement savings. There’s also another type of IRA called a “Roth IRA.” This account lets you make after-tax contributions. Then when you withdraw the income in retirement, you don’t pay any taxes on it. This account makes sense for people who believe that their tax rate is lower now than it will be when they retire. I recommend people split the difference and put half into your Roth and half into a deductible so-called Traditional IRA. you can get an even greater boost to your IRA. For 2017, a married couple earning less than $62,000 earns a tax credit equal to 10% of their IRA contribution. So if a couple puts $1,000 away, they not only lower their taxable income by $1,000, they also get another $100 of hard cash back from the IRS as a tax credit. The tax credit gets bigger at lower income levels. If you make less than $37,000, your credit is 50% of your contribution. Saving is difficult for low-income folks, but this helps. It’s also a great boost to the savings of young people. This is one heck of a deal. Put $2,000 into your IRA and the government will give 4. PRY SOME CASH BACK FROM THE TAX MAN. If your income is under certain limits,

Think of savings as

"paying in once,

getting paid out forever."

66 | October 2017

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