Don’t spend or save all your tax refund. Split the difference.
For the 100 million of you who will get a tax refund this year, the former head of retirement solutions at J.P. Morgan has a great and very simple idea.Instead, says Anne Lester, split the difference. Spend half living, and save the other half in your 401, IRA or other retirement vehicle.
Lester, who spent nearly 30 years at J.P. Morgan Asset Management, including 15 running the Retirement Solutions team and overseeing the target-date funds, has been thinking more about the behavioral aspects of money since retiring in 2020. We all find it incredibly difficult to save money, she says.
As a result, spending more eventually leaves us no happier than we were before. Hence the “treadmill”: you have to keep moving upwards to get another happiness kick.