THE ECONOMIC BLUEPRINT: A journey to the future: Robots and 401(k)s


Every couple months my wife makes the dreaded phone call. She knows what to expect because it's the same thing every time. First she will interact with a machine, then she will speak with an equally incompetent human, and finally, if she's lucky, someone will solve the problem. Yes, we're all familiar with cable company customer service.

Why are cable companies known for terrible customer service? It's because of their robotic responses. We want someone who will hear us and provide customized service. But cable companies program robots and humans with limited responses, leaving everybody frustrated and dissatisfied.

When it comes to saving money, there are many rules of thumb. The first rule of thumb is don't be a robot! Everyone has different backgrounds, current situations, and goals. When protecting and growing wealth, we must think critically.

Think critically: considerations for protecting and growing wealth

This column is the third of three parts on the 401(k). Part one was a brief history of retirement and the 401(k). Part two outlined facts about how a 401(k) operates. This column will explain some rules of thumb for utilizing a 401(k).

My prior column identified advantages but also several disadvantages of a 401(k). To be clear, a 401(k) is not a bad option in the absence of better options. But a 401(k) is not a strategy.

When preparing for the future there is no one product or tool that will solve every problem. Still, we can only use the products that exist in the marketplace. It's how we use these products as part of a coordinated strategy that will determine our outcomes.

There are many considerations when saving for the future. We focus on safety, consistency, liquidity, flexibility, growth and diversification.

- Safety: Lawyers are trained to see risk and there are numerous risks to preparing for the future. Savings should be protected against creditors and predators, and also against losses.

- Consistency: Setting aside where someone saves, it is important to save 15-20% of your gross income for wealth building.

- Liquidity: The future is important, but there will also be opportunities and emergencies along the way.

- Flexibility: There will be ups and downs on the road to success, and a financial strategy should function for real life.

- Growth: To keep pace with inflation and increasing life­styles, accumulating money must also grow (notice that rate of return is one factor, not the only factor).

- Diversification: To protect against potential downsides, don't put all the eggs in one basket; this includes tax diversification with respect to today's taxation and also future taxation.

Rules of thumb

for optimizing a 401(k)

With these factors in mind, here are rules of thumb for a 401(k).

1. If the employer matches at least $0.75 on the dollar, contribute up to the match amount but no more. The match creates efficiencies that will neutralize decades of illiquidity and high taxation upon withdrawal.

2. If the employer matches the entire contribution, consider contributing up to 7% of your income but no more. If a 401(k) is the only savings tool, it will create limited flexibility during working years, but also retirement years.

3. If the employer has no match or a minimal match, consider saving elsewhere. When saving for the future, consider the six factors outlined above for optimal outcomes.

Don't be a robot!

When preparing for the future, don't employ the robotic and mechanistic thinking for which cable company customer service is known. It doesn't work well for them and it won't help to achieve full financial potential. Although saving money in a 401(k) and nowhere else is not bad, it is not optimal. Instead, utilize a 401(k) while considering the six factors listed above and you will improve the chances of success under multiple circumstances.


Attorney Kyle Zwiren works with Financial Architects Inc., an independently-owned company located in Farmington Hills. Zwiren and his team serve attorneys and other professionals to help them design financial plans in line with their goals and based on optimal efficiency. He practiced law prior to becoming a Financial Architect and left the practice to follow his passion. To talk to Zwiren about other topics featured in The Economic Blueprint, email him at or call him at 248-482-3622.

Published: Fri, Jul 19, 2019