What to Do with Your Economic Impact Payment

Consider these tips when using your most recent stimulus check to work toward a more financially secure future.

The $1.9 trillion American Rescue Plan Act of 2021, which was signed into law by President Biden on March 11, provides for various methods of coronavirus relief, including direct payments of up to $1,400 for eligible individuals (or more for eligible couples and families). If you're among those who received or will receive a payment, what you do with this money depends on your unique circumstances and priorities. However, following are four ways to consider using part or all of the payment.

  1. Pay off any existing debt that you can.
    Whether you have credit card or student loan debt, your latest stimulus check may be a good opportunity to step closer to becoming debt-free. Plus, paying off debt doesn't mean you can't save. In fact, chipping away at debt can help reduce or avoid interest, late fees and penalties, while freeing up more money for you to put toward savings. A good rule of thumb is to focus on paying off debt with the highest interest rate first and, of course, always paying at least the minimum balance on what you owe.
  2. Build or create an emergency savings fund.
    If the recent pandemic has proved anything, it's that a "rainy-day" fund is a great help when the unexpected occurs. Even if you've already added money toward an emergency fund, now could be a good opportunity to build it even more, since emergency savings generally make paying for unplanned expenses easier and less stressful. A typical recommendation is to set aside enough money to cover three to six months of expenses.
  3. Save for retirement.
    Don't forget about saving for the long term. If you can, you may decide to invest part or all of your economic impact payment in your retirement savings. For example, if you have a traditional IRA, you might be able to make a tax-deductible contribution for the 2020 tax year (until May 17, 2021) or 2021 tax year, if you qualify for this tax deduction. Even if retirement is years away, recent events highlight how important it is to also pay attention to your long-term savings goals.
  4. Donate.
    If you have money left over after taking care of your debt and setting aside the appropriate amount of savings, consider donating to a cause that's important to you. Another lesson learned from this difficult year has been that providing support to organizations that uplift the communities they serve improves everyone's well-being. Visit usa.gov to learn more about donating to charities.

Keep in mind, these tips also apply if you've recently received or are expecting a tax refund. Whether you've received a stimulus check or tax refund, there are smart decisions you can make with your spending and saving to help you prepare for a financially secure future.

To learn more, please don't hesitate to contact your local Mutual of America representative.

You should consider the investment objectives, risks, and charges and expenses of the variable annuity contract and the underlying investment funds carefully before investing. This and other information is contained in the contract prospectus or brochure and underlying funds prospectuses and summary prospectuses, which can be obtained by calling 1-800-468-3785 or visiting mutualofamerica.com. Read them carefully before investing.

Mutual of America's group and individual retirement products are variable annuity contracts and are suitable for long-term investing, particularly for retirement savings. The value of a variable annuity contract will fluctuate depending on the performance of the Separate Account investment options you choose. Upon redemption, you could receive more or less than the principal amount invested. A variable annuity contract provides no additional tax-deferred treatment of benefits beyond the treatment provided to any qualified retirement plan or IRA by applicable tax law. You should consider a variable annuity contract's other features before making a decision.

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