As an entrepreneur and independent life insurance broker I have to pay my taxes quarterly and usually heavily on April 15^th. I just cannot relate to people that overpay the government to get a tax refund at tax time. But at least if you do get a tax refund try to save it for your future. Just realize having Uncle Sam take more out of your check than you owe is not smart business. The government keeps and uses your money interest free and returns it to you a year later. Just stop it! You are better off paying a few dollars on April 15^th than to get $1,000 back. You lost the use of your money for a year.

First, check with your employer to be sure they have your exemption number correct. The exemption number is the number of people living in your household. If the number is correct and you are still getting a big tax refund, drop the number by one person this year. Now if you are still set on overpaying your taxes every year just to get a big tax refund at least save it for retirement. We Americans are not saving near enough money for retirement.

If you look at government statistics from the department of Employee Benefit Research Institute, Americans are not doing too well. According to the EBRI 33% of working Americans have not started a retirement account? That 50% have managed to save only $2,000 for their retirement. And 66% of working Americans have less than $50,000 saved in their retirement accounts. Just imagine if you could save $1,000 of your tax refund each year. For example, if a 30 year old man simply saves $1,000 per year from his tax refund. Let’s use a long term example of averaging 8% interest in a tax deferred annuity for 30 years. He will contribute in that time period $35,000. However, with time and compounding interest he will have successfully saved $186,102 at age 65. If he just simply didn’t touch it until age 70 the account would be worth $279,781. That is 8 times as much as he saved!

This same act can be accomplished by not overpaying your taxes going forward and just saving it for your future. The above example of $1,000 can be saved by just saving $2.74 per day will equal $1,000 per year. By cutting the amount taken out of your pay check in taxes, the $2.74 saved will never be missed. It is also important while building your nest egg to protect it in the early years from a sudden injury or illness with disability insurance. Also to protect your nest egg from a premature death with some term life insurance.

If you are getting a tax refund every year just to buy a big screen TV, another car or a new toy, just stop and think about your future. We are all getting older every day. We Americans are living longer and saving less. This is a really bad combination. Don’t follow the herd off of the cliff start saving today, it is YOUR future!

“Retirement is like a long vacation in Las Vegas. The goal is to enjoy it the fullest, but not so fully that you run out of money.” —Jonathan Clements

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

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Tim Wilhoit is owner/principal of Your Friend 4 Life Insurance Agency in Nashville, TN. He is a family man, father of 3, entrepreneur, insurance agent, life insurance broker, salesman, sales trainer, recruiter, public speaker, blogger and team leader with over 26 years of experience in sales and marketing in the insurance and beverage industries.