Rebecca Fairbanks Dickinson is one of hundreds of people Prepare + Prosper talks to each year about saving their tax refunds in myRA accounts.
- Saint Paul, MN
Seizing the opportunity to save at tax time
Tax refunds are often the biggest lump sums filers receive all year, which can provide financial breathing room and create a prime opportunity to start saving for the future. However, many people aren’t aware of the savings options available to them.
This is where Minnesota nonprofit Prepare + Prosper comes in. As the organization’s financial capability manager, Cally Ingebritson proudly describes Prepare + Prosper’s team as “tax and finance geeks.” They’re passionate about helping people navigate their financial lives at tax time and throughout the year, and provide free tax filing assistance as part of that mission.
When helping customers with their taxes, Cally and her colleagues frequently talk with them about how to save part of their tax refunds. myRA®, the U.S. Treasury’s no-fee retirement savings account, is a simple, safe way for filers to use their tax refunds to start securing their financial futures.
“A lot of the tax filers who come to us are interested in saving and getting a handle on their money. Saving part of a tax refund in a myRA is a perfect way to set some aside for retirement,” Cally explains.
Making saving automatic
Sarah Osman, a Minneapolis nurse, worked with Prepare + Prosper to put part of her tax refund into a myRA last year. She set a goal for herself to learn more about her finances, and talking about what to do with her refund was an important part of reaching that goal.
“Financial literacy is really important, but people aren’t taught a lot of practical skills. Most people don’t know how to budget, and I didn’t learn from my parents or in high school,” says Sarah, who is a first-generation American and the first member of her family to graduate from college. Her parents arrived in the United States from Ethiopia and Egypt in the 1980s.
When Sarah opened her myRA, she deposited several hundred dollars into her account, and she plans to set up automatic transfers from her paycheck. She also intends to deposit part of her tax refund into her myRA again this year.
The flexibility of myRA, which allows her to split her tax refund – putting part of it into her myRA, and part into her bank account – is appealing to Sarah. “It’s nice because it’s out of mind. I’m not impulsive with my money, but it’s nice because it’s out of sight,” she says.
Imagining a secure future
When Rebecca Fairbanks Dickinson heard about myRA from her Prepare + Prosper financial manager, it inspired her to take a small but significant first step toward saving for the future.
“I was thinking less about retirement; I was thinking about jumpstarting my career,” says Rebecca, a nonprofit worker at an American Indian language school. “It’s kind of a given – you’ve got to save for retirement. But hearing about myRA was a good way to clarify that for me.”
After opening her myRA account, Rebecca deposited $50 from her tax refund into it, and then set up ongoing transfers from her checking account. Since myRA has no minimum contribution or balance requirements, savers can choose to deposit any amount that works for them.
“It was whatever I wanted it to be, whatever fit with my budget at the time,” Rebecca explains. “Twenty dollars a month – for me, that was a small commitment.”
Currently in her mid-20s, Rebecca recognizes that having adequate savings can make a difference later in life. Her family helped care for her aging grandparents while she was growing up. Fortunately, her grandparents had savings to help cover some of the costs.
“As an Ojibwe person, we wanted to treat our elders with the utmost respect, but without the financial capability to do it, it would have been a financially stressful situation,” she says.
Taking the first step
Prepare + Prosper understands that taxes and finances can be intimidating. Often, the key to success is starting small and building momentum. For many savers, the flexibility to build their retirement savings at their own pace makes myRA a great fit.
In addition to working with nonprofit organizations that provide tax filing assistance, the U.S. Treasury is collaborating with tax preparation software providers like TaxAct, TaxSlayer, and TurboTax to encourage their customers to save their refunds in myRA accounts. Individuals can also transfer money to myRA accounts from checking or savings accounts at any time, even after they receive tax refunds.