ACB: Press Releases

Contact:	Robert Schmermund (202) 857-3104 Jim Eberle (202) 857-3145	Jim Eberle (202) 857-3145 (work) (703) 893-2593 (home) [email protected]	For Immediate Release August 20, 2001 #01-53
E-mail: [email protected]

LET’S PLAY, ‘WHO WANTS TO BE A MILLIONAIRE’

Press Release Tools
	E-mail This Press Release
	Printer-Friendly Format

WASHINGTON, D.C. — “The check is in the mail,” according to Uncle Sam. But once they get their checks, Americans must decide whether to save or spend their tax refund. Under the new law, single taxpayers are eligible to receive up to $300, heads of households up to $500 and married couples up to $600.

“Using your tax return to kick-off a personal savings program could pay for a child’s college education, help fund your retirement or even make you a millionaire,” according to Diane M. Casey, president and chief executive officer of America’s Community Bankers. Casey says anyone can become a millionaire by simply stating that the answer to the question of what to do with any tax return, or any extra cash, is – “Save it.”

Casey points out that a 17-year-old single taxpayer could start on the road to becoming a millionaire at age 65 by taking his or her $300 return and using it to open a long-term savings account. In addition to your initial deposit of $300, if the account pays 5 percent and you save $50 a month until you are 23, $250 a month between 24 and 30, $500 a month between 31 and 40 and $1,000 a month between 41 and 65, you will have more than $1 million at age 65.

Tip: To determine how many years it will take to double your savings, take 72 and divide it by the interest rate your account pays.

Tip: Save early and regularly, letting interest-compounding help you buy that new home, provide a secure retirement nest egg, or make you a millionaire.

Tip:Once you let a retailer cash your refund check, it’s unlikely you’ll have any left over to save. Instead, go to your local community banker and start or add to your savings.

“Saving is all about setting goals, giving up something today to get something better tomorrow,” the banking trade group executive says. “I am going to keep my current car a little longer, because I am saving to purchase a new home,” is the kind of decision Americans, who have the lowest savings rates of citizens in any industrialized nation, don’t make often enough, according to Casey.

“Even if you choose to use that tax return for something else, like paying down some bills,” Casey advises, “you can still obtain tomorrow’s financial objectives by starting to save today.” Here are some other tips from America’s Community Bankers on saving, many of which result from the new tax law that can help you do just that:

If you are 50 or older, consider taking advantage of the new “catch-up” provisions that allow those who may not have saved enough to boost IRA contributions by an additional $500 a year beginning in 2002 and $1,000 a year beginning in 2006.
If you are 40 or younger, socking away the maximum contribution will enable you to best take advantage of the Roth IRA’s tax-free withdrawal provisions at retirement.
You may qualify for a tax credit between 2002 and 2006 of from 10 to 50 percent on IRA contributions if your adjusted gross income is $50,000 or less on a joint return, $37,500 for heads of households and $25,000 for singles.
Education pays. Statistically those with college degrees earn 50 percent more than those with just high school diplomas.
Since financial aid formulas weigh assets held in a child’s name more heavily then those held in the parent’s name, families that believe their children will qualify for aid need to carefully weigh whether the potential loss of aid will outweigh any tax benefits provided by an education IRA.

Casey recommends talking to your community banker before opening any type of savings account, especially IRAs. “The deductibility, contribution, conversion and withdrawal rules governing IRAs are sufficiently complex to warrant discussing the fine points of these savings instruments with your community banker to help you sign up for the type of account that best suits your needs and goals,” she advises.

ACB has a free brochure on IRAs that can be obtained by calling (888) 872-0568.

America’s Community Bankers is the national trade association committed to shaping the future of banking by being the innovative industry leader strengthening the competitive position of community banks. To learn more about ACB, visit www.AmericasCommunityBankers.com.

-30-