Math is Our Friend

“It’s amazing how the power of math can boost wealth.”

The way to make investment math work for you in most instances is to save more and spend less. Duh!

But a recent Forbes article, “The Most Potent 401(k) Booster,” says that if you have the self-discipline and the ability to plan, you can shrink your debts and add to your emergency, college, or retirement funds.

Saving is essential. A recent Wells Fargo survey says that 71% of those over 40 who are consistent savers believe they will have enough for retirement. The more you save, the more confident you will become in your ability to live the life you want.

Start saving when you hit the workforce. But if you’re in your 50s, you can start to save more aggressively. Contribute the maximum amount allowed to the 401(k) plan—$18,000 in pre-tax dollars in 2015 and make catch-up contributions to help make up some ground. You can also save an additional $6,000 if you’re over 50 as a “catch-up” contribution and deduct these amounts from your federal income tax (unless they are made to a Roth IRA or Roth 401(k), which tax contributions but not withdrawals).

If you aren’t saving on your own or through a 401(k), set up an automatic savings plan that contributes money to your 401(k) or IRA. Most employers have this. Then look at your savings rate—this number makes a big difference in how much you can save.

By increasing your contribution, you can boost your nest egg dramatically. For example, let’s say you’re 30 and you make $50,000 a year. If you receive an annual raise of 2%, and your employer matches half of your 3% contribution, after 35 years, you’d have just over $400,000 at 6% annual rate of return. That’s with a starting balance of only $10,000.

But what if you double your contribution rate to 6% and all other factors remain the same? You’ll have more than $730,000 with a modest rate of return and low starting balance. This works only if you save more and take your employer’s match. Why not? It’s free money. If you set it up on an automatic plan, you’ll save even more because when you get a raise, your contribution amount will also increase. The math works all the time.                                                                                                               

Reference: Forbes (December 7, 2015) “The Most Potent 401(k) Booster”

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We've been putting together as many resources as possible so that we can continue to help:

  • If you’re a current client with a signing appointment or a prospective client with a consultation and would prefer that meeting take place in your own home, we can accomplish that with a little bit of pre-planning on our part and with the addition of a laptop, smartphone, tablet or other computer in your home to facilitate this virtual meeting. For those of you that need to sign legal documents, that too can be accomplished with the use of a webcam (FaceTime etc.), so that we can witness and electronically notarize all of your important legal documents.
  • We launched the rollout of our on-demand webinar early so that new clients and our allied professionals can view the important component parts of ‘an estate plan that works’ at their convenience.  That is available on our website.
  • Live video workshops will be produced as quickly as possible and certainly ahead of our previous schedule; we will keep you posted as these events become available. Given the ‘boutique’ nature of the firm, we rarely have more than ten people in our office including team members at any one time. During this period of ‘social distancing,’ we promise to have no more than 8 people at any time.   This allows us to comply with the Governor’s directive to limit in-person gatherings.
  • The best way to communicate with us is still by phone during regular office hours of 8:30 to 5:00, Monday through Friday, or, you can email any of our team members (that is, their first name followed by @zarembalaw.com).  We will respond to these emails as quickly as possible.
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Thank you, Walt and the Zaremba Team

Update to our Process

The unprecedented coronavirus pandemic has taken our entire country by surprise. We understand how difficult this time is for America’s businesses and families.  However, we believe it is vitally important that we make every effort possible to continue to offer solutions that avoid disrupting our important partnership with you, your family and friends.  As you know, estate planning is not something that should wait for a more convenient time, therefore the opportunity to address your important goals both during and after this crisis should not wait.  To that end, we have added the option of a ‘virtual consultation’ to our office process.  You will now have a choice of either meeting with us in our office or in the comfort of your own home.