April 02, 2014
Steven Brett, President, Marcum Financial Services, Quoted in U.S. News & World Report Article, "Tax Advice for Millennials."
By Kimberly Palmer, Senior Editor, U.S. News Money
An array of deductions and credits can help 20-somethings reduce their tax burden.
Filing taxes isn’t easy for anybody, but it can especially be daunting for millennials, who have less practice with the annual tradition, often undergo life transitions that impact their filing status and are frequently eligible for many of the constantly-changing array of tax deductions and credits. U.S. News sought out a handful of top experts to help 20-somethings navigate the process and leave as much money in their bank accounts as possible. Here are a dozen of their suggestions.
Max out your tax-advantaged retirement accounts.
“It’s never too early to begin saving for retirement, whether you’re 21 or a thirty-something,” says Steven Brett, president of the advisory firm Marcum Financial Services. Anyone with access to a 401(k) account through their employer can start there, especially if their employer offers matching benefits. Those in the beginning of their careers who are not in a high tax bracket might want to consider a Roth 401(k) if it’s available, because it allows you to pay taxes today instead of later, when you might face a higher tax rate. Those without access to those employer-sponsored accounts can consider an individual retirement account or Roth IRA, Brett adds.
If the goal is to accumulate $1 million by a retirement age of 65, with an assumption of a 6 percent return on investments, then a millennial starting at age 20 will have to save $361 per month to reach that amount. If that same person waits until age 30 to start saving, she’ll have to save almost $700 per month, and waiting until age 40 would require saving $1,436 per month, Brett calculates.