Almost half of Americans expect to receive a tax refund this year and most are expecting to either save the money or use it to pay off debt. Surprisingly, Generation Y is more likely to save than older generations.
Almost half of Americans expect to receive a tax refund this year and most are expecting to either save the money or use it to pay off debt.
Among the 47% of Americans expecting to get a tax refund, 47% will save their refund money, while 44% use it to pay off debt, according to a TD Ameritrade survey. Meanwhile, 14% expect to owe the government money and 19% responded that it’s too soon to say whether or not they will be receiving a refund or not.
“It’s good to see that people are more likely to save their tax refund or use it to pay down debt rather than perhaps spending it unwisely,” Lule Demmissie, managing director of investment products and retirement at TD Ameritrade, said in a statement.
While single, men are more likely to save their tax refund than women (54% to 37%); however, those numbers change during marriage, when women are more likely to save than men (56% to 41%).
One interesting observation from the survey is that the younger generation seems to have learned from the financial crisis as more than half (58%) of Generation Y intends to save their refunds, while Generation X and the Baby Boomer generation are less likely.
Only 15% of respondents said they plan to spend their tax refund on discretionary items, which is in line with last year’s 14%. Less people plan to pay off debt this year (down from 51% last year). The biggest difference from last year might be the percentage expecting to spend their refund on necessities like food or utility bills, which dropped to 28% this year from last year’s 48%.
Just 15% plan to invest their tax refund, while 6% will donate to charity and 5% will give the money to family members.
“We would also encourage people to consider investing the money for the future, Demmissie added. “Contributing lump sums like year-end bonuses or tax refunds can be a good way to bolster a retirement account.”