More than Half of Americans Plan to Put 2013 Tax Refunds Towards "Necessary" Expenses

While One Third Expect To Save Funds, Far Fewer Plan to Invest

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Feb 25, 2014, 09:08 ET

ST. LOUIS, Feb. 25, 2014 /PRNewswire/ -- According to a recent survey by financial services firm Edward Jones, 52 percent of Americans will spend their annual tax refund on necessary expenses such as loans, credit cards and other household expenses. While another 30 percent plan to put the money into savings, just eight percent say they will invest it.

As the economy continues its recovery, it's no surprise many Americans also are focused on their own recovery, paying down debt and improving their current situation." said Scott Thoma, Investment Strategist at Edward Jones. "That said, we would encourage the nearly one-third who aren't using their refund on current expenses to instead focus on their future self by investing it in a long-term savings vehicle such as a 401(k), IRA or 529 college savings plan. Time can be your friend – or your enemy, so consider "splurging" on your retirement savings plan. Even if only a portion of the tax refund was invested each year, this offers the potential for more portfolio growth in the long term, and could help to ensure you're on track as you pursue your retirement goals."

The Savers and The Spenders
The survey found respondents between the ages of 55 and 64 are most likely to save their refund (43 percent). Respondents just a few years younger had a much different opinion, with just 25 percent of respondents between 45 and 54 years old planning to save their refund.

The survey's youngest respondents, those between 18 and 34, are most likely to put their refund checks to use on "fun" things such as clothes, entertainment and restaurants (12 percent). This compares to just 5 percent of those 65 and older who would do the same.

The Wealth Effect
Household income has the greatest influence on Americans' decision to save, spend or invest their tax refund in 2014. Not surprisingly, respondents with the lowest household income (those making less than $35,000 a year) are the most likely to spend their tax refund on necessary expenses (61 percent). This compares to just over one-third (37 percent) of those with the highest household income ($100,000 or more). Interestingly, the wealthiest respondents are not the most likely to invest their refunds. Those with household incomes between $50,000 and $75,000 win this title.

All for the Children
In general, households with children are the most likely to spend their refunds on everyday expenses, and those with older children are even more likely. Following that point, Americans with no children are the most likely (10 percent) to spend their tax refund on something "fun," whereas only 1 percent of those with children ages 13 to 17 are willing to splurge.

Geography Makes a Difference
Americans living in the Northeast are the most likely to invest their tax refund (11 percent). Those who live in the West are the most likely to simply save their refund (35 percent).

About Edward Jones

Edward Jones provides financial services for individual investors in the United States and, through its affiliate, in Canada. Every aspect of the firm's business, from the types of investment options offered to the location of branch offices, is designed to cater to individual investors in the communities in which they live and work. The firm's 12,000 financial advisors work directly with nearly 7 million clients to understand their personal goals – from college savings to retirement – and create long-term investment solutions that emphasize a well-balanced portfolio and a buy-and-hold strategy. Edward Jones embraces the importance of building long-term, face-to-face relationships with clients, helping them to understand and make sense of the investment options available today. Edward Jones, which ranked No. 4 on FORTUNE magazine's "100 Best Companies to Work For 2014," is headquartered in St. Louis. The Edward Jones website is located at www.edwardjones.com, and its recruiting website is www.careers.edwardjones.com. Member SIPC.

Editor's Note

Survey was conducted by ORC International's CARAVAN Omnibus Services and was based on 1,018 landline and cell phone interviews of U.S. adults conducted January 30 – February 2, 2014. The margin of error was +/-3%.

SOURCE Edward Jones