More than half of workers are at risk of losing free money for their retirement. don’t be like them

Saving for retirement takes effort and sacrifice, especially since most people will need hundreds of thousands or even millions of dollars invested to provide enough income to supplement Social Security.

Unfortunately, many workers pass up an opportunity to facilitate their savings efforts. This is because they are unaware of a significant chance of earning free money to invest in their retirement.

Image source: Getty Images.

Missing out on this important retirement tax credit?

The disturbing news that Americans may be running out of free retirement money comes from the Transamerica Center for Retirement Studies.

The Center recently conducted a study and found that only 46% of workers are aware of a tax credit called a savings credit. This includes 50% of salaried workers, 41% of self-employed workers and 24% of unemployed workers of working age.

Not knowing about savings credit is a huge problem because, for those who qualify for it, it is one of the most valuable sources of free retirement funds. Essentially, it offers a tax credit of up to 50% of the amount you invest in eligible retirement accounts. There is a cap on credit, however. You can claim the credit for up to $2,000 in retirement account contributions if you are a single filer or up to $4,000 if you are a married joint filer. This means that the credit is worth a maximum of $1,000 for single filers or $2,000 for married joint filers who max out their retirement accounts.

The exact credit you qualify for depends on your income, and the income thresholds change each year. Here’s how much your tax credit is worth in 2022 based on your income and tax status.

Amount of your tax credit

based on income and filing status

Married Filing Jointly


head of household


All other registrants


50% of your contribution

$0 to $41,000

$0 to $30,750

$0 to $20,500

20% of your contribution

$41,001 to $44,000

$30,751 to $33,000

$20,501 to $22,000

10% of your contribution

$44,001 to $68,000

$33,001 to $51,000

$22,001 to $34,000

0% of your contribution

Over $68,000

Over $51,000

Over $34,000


Remember that a tax credit is not the same as a deduction – it is much more valuable. Credits reduce your tax bill dollar for dollar rather than simply reducing taxable income.

If you owe $3,000 in taxes and you get a $2,000 credit, the full $2,000 is erased from your tax bill and you are left with only $1,000. So the IRS basically gives you up to $2,000 free if you contribute $4,000 to a retirement account as a married couple. Your $4,000 contribution will only reduce your net income by half that amount once you apply for the credit.

This credit is also in addition to any other deductions you get. So if you contribute $4,000 to an IRA, you can usually deduct that $4,000 from your taxable income. and get an extra $2,000 credit.

Don’t leave money on the table

More than half of Americans who don’t know about this credit could miss the chance to get valuable help saving for retirement. If you were one of them, you are now aware of the possibility of earning free money and you can plan this year to contribute enough to your retirement accounts to earn the full amount offered by Uncle Sam .

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