When I got laid off in 2009 my husband and I cleaned out our retirment accounts to pay off our cars a couple of years early and clear out our debt. It wasn't easy (we lost 10% off the top and had to pay taxes on our savings as income...it was an ouch!) but it was necessary at the time.

Now that we're rebuilding our retirement savings I found out a way to save on our taxes while doing the saving we planned the whole time. Since we file our federal income tax as married, filing jointly, we're allowed to put up to $5000 into our IRAs with a tax benefit. You can put more in, of course, but without the extra tax write-off. Being as neither of us has any saving plans from work, we can take a 50% deduction and lower our adjusted gross income. If you do have a work plan savings (401k) then it's a 25% deduction. Adjusted gross income is the last number on the bottom of the first page of the 1040A and 1040. It's basically what you made all added up and the few deductions that are allowed taken away. Less AGI=less taxes to pay.

I had always heard about tax savings for the IRA, bu it wasn't until I started taking care of my retirement myself that I truly understood it. Just thought I'd pass this bit of information on.