Success with the saver tax credit?

[mesquite77]

Anyone had success talking someone into using the savers tax credit as a way to start retirement savings?

I'm attempting year 2 of my quest to suggest that a 2nd yr school teacher put a bit of her tax refund into a Roth or Traditional IRA to get the credit.

I have a spreadsheet with 12 scenarios from $20 traditional IRA contribution increasing her refund by $12 to a $2,000 traditional IRA contribution increasing her refund by $610.

A $1,700 Roth Contribtion will mean that she's increased her refund by $180, and sent all of that money to a Roth.

Matching from the government seems like a no-brainer to me, but it isn't obvious to her.

[Deleted]

If she's a second-year school teacher, she may not have the money even with the incentive. She probably has a low salary, mandatory pension contributions, a car payment, and a student loan.

There is a reason she qualifies. She is low-income.

[mesquite77]

She's got the money - just picking where the $1500-$2100 refund will go - bank account, IRA or Roth IRA.

[haapai]

I wish you luck. I've only convinced one person to do what you are describing and that was myself.

It was a year late also. I'd missed a heck of a match the prior year. I had the cash and was in 50% territory but didn't know about the credit. Realistically speaking, I don't know if I could have convinced myself to take it either. I'd been through a rocky patch and was obsessed with debt reduction and building an EF. It would have been very hard to convince myself to send the money away for decades.

It's a pity that the saver's credit isn't better known.

[Deleted]

Mesquite, when you say she is picking where the money will go . . . well, obviously, she prefers bank account. Ask her why. If there aren't any horrendous credit card bills that she is targeting, then perhaps you might show her a spread sheet that show the impact of investing the $$$ now and never putting another $ in for 30 years. She might really understand then.

Or she might not. We didn't all start saving for retirement at 22. It takes a certain mindset that she may not have yet developed. Remember that she is probably contributing to a mandatory pension. She may believe that is all that is necessary. Lol.