How to use your tax refund to save for retirement

Tax refund tips

NEW YORK -- A lot of baby boomers are heading into their golden years in a challenging position. A survey found 42 percent have saved nothing for retirement. But some will be coming into money, in the form of a tax refund, averaging $2,900 this year. On the eve of the tax deadline, it's not too late to create a nest egg.

At Velvet Ice Cream in Utica, Ohio, two employees shared the scoop on their retirement plans. Production supervisor Brian Neighbarger, 56, keeps the operations running smoothly. As an employee for 37 years, retirement is on the horizon, but he's a little worried.

CBS News

"I should have planned a lot sooner, when I was 20," he said. "Life gets in the way of saving."

In the early '90s, Neighbarger contributed to his company's 401K for a few years but then stopped for more than a decade. He finally decided to get serious and re-started contributions in 2014.

Machine operator Ryan Bickle, 27, could do just as his older coworker suggests, but he says the hardest part about saving is "the ever increasing cost of living."

So far, day-to-day needs have taken priority over retirement, but Bickle plans to enroll in the company 401K this summer. The big question is what percentage of his pay should he start investing in the plan?

Ryan Bickle is in thinking about his future early on CBS News

Considering that Velvet Ice Cream provides a match up to 5 percent of Ryan's salary, that's a great place to start. If Ryan were to save $125 per month in the 401K for the next 40 years until retirement, his contribution, plus the match would amount to over $300,000 in savings.

As for Neighbarger, the best strategy is to save as much as he can now, work as long as possible and plan ahead by projecting his spending plans in retirement.

  • Jill Schlesinger On Twitter» On Google+»

    View all articles by Jill Schlesinger on CBS MoneyWatch »
    Jill Schlesinger, CFP®, is the Emmy-nominated, Business Analyst for CBS News. She covers the economy, markets, investing and anything else with a dollar sign on TV, radio (including her nationally syndicated radio show), the web and her blog, "Jill on Money." Prior to her second career at CBS, Jill spent 14 years as the co-owner and Chief Investment Officer for an independent investment advisory firm. She began her career as a self-employed options trader on the Commodities Exchange of New York, following her graduation from Brown University.