Boston - Three out of ten taxpayers* are still unaware they are taking home more money due to the payroll tax cut, according to a survey by John Hancock Financial Services. The percentage unaware is up slightly from 2011, and persists despite media coverage of the payroll tax cut debate in Washington, and its presence as an issue in the U.S. presidential campaign.
Moreover, this tax season it appears that taxpayers are loosening their grip on their paychecks. In the John Hancock survey, 20 percent report that they are more likely to spend the extra take-home pay than they were last year (12 percent). The percentage planning to save the extra pay has decreased significantly to 22 percent in 2012, compared with 29 percent in 2011. One in five used their extra pay to reduce their debt, consistent with 21 percent last year. One in seven increased their contribution to their retirement plan at work, while ten percent invested in a retirement plan outside of their workplace.
In contrast to their plans for extra take-home pay, taxpayers who receive a refund plan to save it. Half (49 percent) plan to place their refund in a savings account, while 25 percent plan to use any refund to pay down debt. One in five (20 percent) plan to spend their refund, consistent with 22 percent in 2011. Eighteen percent plan to put the refund toward their retirement plan outside of work.
Of the group who plan to spend their refund check, just over half (51 percent) say they will take a vacation. More than one quarter (28 percent) will spend the money on basic household needs, 19 percent on entertainment, and 16 percent on home improvements. Thirteen percent of the spenders will purchase a luxury item, while eight percent will make a big ticket purchase.
In other findings:·
The tax season findings were drawn from the quarterly John Hancock Investor Sentiment Index™ survey, which measures investors’ feelings about the current economic climate and their evaluations of what represents a good or bad investment given the current environment. The poll also asks consumers about their confidence in reaching key financial goals and likelihood of purchasing financial products and services.
*This online survey was conducted by independent research firm Mathew Greenwald & Associates. A total of 1,006 investors were surveyed February 13 to February 24, 2012. Respondents were selected from among members of Research Now’s online research panel. To qualify, respondents were required to participate at least to some extent in their household’s financial decision-making process, have a household income of at least $75,000, and assets of $100,000.
The data were weighted by age and education to reflect the population of Americans matching the survey’s qualification requirements. In a similarly-sized random sample survey, the margin of error would be plus or minus 3.15 percentage points at the 95 percent confidence level. Due to rounding and missing categories, numbers presented may not always total to 100 percent.
About John Hancock Financial and Manulife Financial Corporation
John Hancock Financial is a unit of Manulife Financial Corporation, a leading Canada-based financial services group with principal operations in Asia, Canada and the United States. In 2012, John Hancock celebrates 150 years of serving clients across the United States, while Manulife celebrates its 125th anniversary. Operating as Manulife Financial in Canada and in most of Asia, and primarily as John Hancock in the United States, Manulife Financial Corporation offers clients a diverse range of financial protection products and wealth management services through its extensive network of employees, agents and distribution partners. Funds under management by Manulife Financial and its subsidiaries were C$500 billion (US$491 billion) as at December 31, 2011. Manulife Financial Corporation trades as 'MFC' on the TSX, NYSE and PSE, and under '945' on the SEHK. Manulife Financial can be found on the Internet at manulife.com.
The John Hancock unit, through its insurance companies, comprises one of the largest life insurers in the United States. John Hancock offers a broad range of financial products and services, including life insurance, fixed and variable annuities, fixed products, mutual funds, 401(k) plans, long-term care insurance, college savings, and other forms of business insurance. Additional information about John Hancock may be found at johnhancock.com.