Part of the ML Management Partners team in New York, Benjamin Leitman works with high net worth clients in Sports and Entertainment to develop optimal tax and insurance strategies. Benjamin Leitman emphasizes financial planning approaches that take into consideration capital markets and the economy, and also reflect individual timelines and objectives.
With uncertainty a prevailing trend in 2020, Americans have responded by saving more and keeping more cash at hand. The personal savings rate, which had hovered at 7 percent for several years, rose to a high of 33 percent in April before settling into the teens. For some people, this has meant shoring up their emergency fund; for others, it has involved allocating money between short-term and long-term savings accounts.
Short-term goals include saving for down payments on big-ticket items such as homes, to take advantage of historically low-interest rates, as well as vehicles. At the same time, many are looking toward savings accounts with the potential to grow, such as education accounts and retirement vehicles like IRAs and 401(k)s. The tax-advantaged nature of these vehicles helps mitigate volatility, while still encouraging long-term returns designed to keep pace with inflation.
For those who find money to be tight at present, one viable strategy involves creating a plan that increases savings over time. For example, a family may decide to increase their contribution to 401(k) plans by a certain amount each year, until the maximum allowed contribution is met. This type of approach flexibly defines a growth orientation, while ensuring that sufficient cash is at hand to meet immediate needs.
