While you rely heavily on investment income in retirement, you also need to continue accumulating capital. In essence, those who receive tax refunds are giving the government what amounts to an interest-free loan. A simple adjustment or two to your W-4 form could help you curb your charitable giving to Uncle Sam. But don't stop there. Invest the money that would have been withheld directly into your future.
Many people see overpayment of their taxes as a convenient savings plan.
Once you've arranged to have less tax withheld, you'll have more money to save. Simply elect to have those additional funds automatically deposited into your savings or money market accounts. Moving funds into your accounts via automatic deposits make saving for your future easy and painless. If you make pretax contributions to your IRA, there's another plus. These contributions generally aren't subject to federal income tax until withdrawals begin at retirement.