Younger generations of “super savers” crushing retirement goals
Small sacrifices today helps them better prepare for tomorrow
Younger generations get a bad rap for their saving habits, but there is a group of savers under 52 who are a financial force to be reckoned with. A recent survey by Principal Financial Group® dug into the financial habits of Gen X and Gen Y (millennial) savers who are deferring 90 percent or more of the IRS maximum amount to their 401(k) account. (That’s $16,200-$18,000 per year.)
Even though retirement is far off for these individuals, 91 percent listed saving for retirement as one of their main goals. In fact, more than twice as many millennials say they’re saving for retirement (90 percent) than raising a family (40 percent).
“These ‘super savers’ are incredibly driven. We see them making sacrifices to achieve their goals, and sometimes that includes delaying milestones until they feel financially secure,” said Jerry Patterson, senior vice president of retirement and income solutions at Principal®. “Whether it’s driving an older vehicle or working extra hours, these individuals have said ‘my future is important, and I’m going to save to make it great.’”
How to become a “super saver”
There are a number of ways that millennials and Gen Xers are able to save so much for retirement. Many say it’s a matter of prioritization, and making small sacrifices today helps them better prepare for tomorrow. Where can the average saver start? Some of the top areas “super savers” compromise are:
- Cars: Nearly half of “super savers” are driving older vehicles (47 percent) in order to direct dollars to their retirement savings.
- Homes: Cars aren’t the only carefully considered big ticket purchases. “Super savers” often choose to live in modest homes (45 percent) and, among millennials, 18 percent are renting vs. buying.
- Vacations: “Super savers” are prioritizing retirement savings over the vacation fund and many say they are traveling less than they’d prefer (42 percent).
- Work: All this extra work comes at a price. Two in five (40 percent) “super savers” say they put up with work-related stress and more than a quarter (27 percent) also put in extra hours instead of spending time with friends and family.
“We were happy so many young people are prioritizing their savings, but we know there’s still a long way to go,” added Patterson. “At Principal, we try to make it as easy as possible to have confidence in your financial future. A small step today can help people save enough and have enough in retirement.”
The survey was conducted online within the United States by Principal among 2,424 retirement plan participants ages 23-51 who have either reached the IRS maximum contribution $18,000 for retirement contributions or are 90 percent of the way toward the max. The margin of error is 1.9 percent.
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