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Get free money to save for retirement

Get free money to save for retirement
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If you think you have to earn a lot of money to save, you’re in for a sweet surprise. There’s a little-known tax credit that gives low-income earners up to $1,000 as a reward for saving money

Read more: 11 things to know about Social Security in 2017

Get paid by the feds to save money for the future

Some 10 years ago, Congress passed what’s called the Saver’s Credit during the Bush administration with the goal of assisting savers who make a decent living but not a huge income.

Here’s the deal: If you save $2,000 in a 401(k), IRA, 403(b) or 457 plan, the government will match your money as much as 50% — up to a maximum of $1,000.

If you save less than $2,000, the government will give you a smaller percentage — either $400 or $200.

The IRS provides a real-world example of how this credit works on its website:

‘Jill, who works at a retail store, is married and earned $37,000 in 2016. Jill’s husband was unemployed in 2016 and didn’t have any earnings. Jill contributed $1,000 to her IRA in 2016. After deducting her IRA contribution, the adjusted gross income shown on her joint return is $36,000. Jill may claim a 50% credit, $500, for her $1,000 IRA contribution.’

Get free money to save for retirement

This is a tax credit that you have to ask for when you’re doing your taxes or having them done for you; you won’t automatically get this benefit. (The form you’ll need to file is 8880.)

Full-time students are not eligible for the credit.

The real shame is that nobody seems to be aware of this tax credit in the first place. Anecdotally, here on Team Clark we’ve heard that some 90% of people who qualify don’t even know this program is out there. 

Our goal here at is for you to save money. If there’s an opportunity, we want you to take the dough!

Read more: 26 ways to bring in extra cash each month

Big investments start with small steps

Theo Thimou About the author:
Theo is director of content for He has co-written 2 books with Clark Howard, including the #1 New York Times bestseller Clark Howard's Living Large in Lean Times.
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