6 Ways To Invest Your Tax Refund Into Your Retirement
Written by
Travis Woods
Edited by
Rebekah Evans
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More American taxpayers will be receiving a tax refund in 2026 compared to previous years, per the Tax Foundation. While it may be tempting to treat that refund like free money and funnel it into a spending spree or a vacation fund, the smartest play would be to protect your golden years by investing your tax refund into your retirement.
That said, there is an endless array of investment opportunities for retirees, which can make it hard to know where to safely invest your refund. That’s why GOBankingRates recently sought out expert advice regarding the best way retirees of every income level can invest their refunds.
Low-Income Retirees
- Roth IRA
- Saver’s Credit
- Money market mutual fund
- High-yield checking or savings account
“If you are a low-income retiree, which means you make under $23,000 if you are single or under $46,000 if you are married, you can put your refund into a Roth IRA,” said George Dimov of Dimov Tax. “You can also get something called the Savers Credit. This is worth up to 50% of what you put into the Roth IRA or up to $1,000 per person. A lot of low-income retirees do not know about this.”
To this, former tax lawyer and certified financial planner Diana Richey added that lower-income retirees should consider prioritizing stability and liquidity. “And [they] could consider adding their refund to a money market mutual fund or a high-yield checking or savings account,” she said.
Middle-Income Retirees
- Dividend-focused funds
As for retirees in a middle-income range, Richey opined that investing in income-generating assets like dividend-focused funds can help balance current spending with future purchasing power during retirement.
Meanwhile, Dimov continued to suggest Roth IRA investment for middle-income retirees as well. “You can use it to pay your taxes early so you do not get penalized,” he explained. “A Roth IRA is better than an IRA at this point because you do not want to add to the money that you already have to take out.”
High-Income Retirees
- Donor Advisor Fund
For moneyed retirees, Dimov suggested using a tax refund to start a Donor Advisor Fund. “This means you can give to charity now and get a tax deduction, then give the money to the charity later.”
Richey added that focusing on asset location should be a goal, with wealthy retirees “using up the annual gift tax exclusion amount to move assets out of the taxable estate or adding to a Roth IRA if there’s any earned income.”
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