Motivation to Start Saving for Retirement Today

Fitzgerald Financial Group
2 days ago
3 min read

Presented by John Fitzgerald

Family looking at financial statement representing planning together on saving for retirement.

If you feel funding your retirement plan is not a priority and that your disposable income should go toward more immediate needs, you are not alone. Many taxpayers know they should be saving for retirement, but other expenses often get in the way of their retirement savings goals. There is, however, an added incentive to save for retirement known as the “saver’s credit”—and it may motivate you to start saving today.

What Is the Saver’s Credit?

Low- and moderate-income individuals may be eligible for a tax credit for contributing to their IRA or employer’s retirement plan. This saver’s credit reduces the federal income taxes you pay on a dollar-for-dollar basis.

Contributions to 401(k)s, 403(b)s, 457 plans, SIMPLE IRAs, SEP IRAs, traditional IRAs, and Roth IRAs are eligible for the saver’s credit, but you cannot claim your employer’s contributions to your retirement accounts; rollover contributions are also ineligible. The saver’s credit can also be taken for your contributions to an Achieving a Better Life Experience (ABLE) account if you are the designated beneficiary. Your adjusted gross income (AGI), combined with the amount of your contribution (less any recent distribution you may have received from your retirement plan or IRA), will determine the credit you receive. Because the saver’s credit is in addition to any tax deduction you may receive for contributions to your traditional IRA, it helps offset

the cost of funding a retirement account and reduces your overall tax liability.

Do You Qualify

To qualify for the saver’s credit, you must:

Be age 18 or older
Not be a full-time student
Not be claimed as a dependent on another person’s return
Not exceed a certain AGI level (based on your tax return for the year of the credit)

Depending on your AGI and filing status, you can claim a 10 percent, 20 percent, or 50 percent credit for the first $2,000 you contribute to a retirement account during the year. If you are married filing jointly, the maximum eligible contribution is $2,000 each for you and your spouse. Therefore, the maximum saver’s credit is $1,000 for individuals and $2,000 for couples.

Chart showing 2025 Saver's Credit eligibility guidelines, with a breakdown by credit rate and tax filing status.

The Bottom Line

The key to taking advantage of the saver’s credit is participation in your retirement accounts. The fact that this is a credit and not a deduction makes it even more attractive; although deductions reduce your taxable income, credits reduce your tax bill dollar-for-dollar.

So, if you haven’t opened a retirement account, or you have one but haven’t contributed, consider doing so as soon as possible. If you think you may be eligible for the saver’s credit, be sure to discuss the matter with your financial advisor or tax professional.

This material has been provided for general informational purposes only and does not constitute tax, legal, or investment advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a qualified professional regarding your situation. Commonwealth Financial Network® does not provide tax or legal advice.

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Fitzgerald Financial Group is located at 727 East Landis Ave, Suite 1, Vineland, New Jersey 08360 and can be reached at 856-692-0022. Securities and advisory services offered through Commonwealth Financial Network®, member FINRA/SIPC, a Registered Investment Adviser. Fixed insurance products and services offered through CES Insurance.

Authored by the Strategic Retirement Solutions team at Commonwealth Financial Network.®