7 secrets to help you save 15% and become a retirement super saver

Over half of Americans are worried about whether their finances will provide them certainty in retirement. And yet, only about the same number have saved anything in retirement accounts.

It’s a striking disconnect, and the reasons are varied. Some people may not have resources to save. Other times, unexpected events such as a job loss upend even the most careful savings plans.

On the flip side are people who have managed to save quite a lot. Is it magic, luck, or a little of both? For those in that rarified category of retirement super savers—tucking away 15% or more, or saving at least 90% of the maximum allowed—it’s neither. It’s spending on the things that matter, saving early, steadily, and incrementally, and taking the long view. How can you do this too? Read on.

Heather Winston, head of product strategy for individual solutions at Principal^®, started saving at age 5, stashing birthday or gift money in an account her parents set up. Winston wasn’t yet working, but she was learning a valuable lesson: start and maximize your savings as early as you can. It’s something she counsels others who want to become good (or super) savers. “Start saving right away,” Winston says. “You’re going to help develop your own healthy attitude toward money, responsibility, and planning for the future.”

Another advantage of saving early? The power of compounding means later in your life, you may have enough stashed for those long-term goals so that you can shift saving to other priorities.

One out of every four employees who are eligible for an employer retirement savings match aren’t getting the full amount.

It’s like leaving money in the wind. Think of it this way: Say you save 3% of your salary and your employer matches up to 6%. If you increase your contribution to 6%, your employer adds another 3%. That’s 9% going into your retirement—essentially tripling your impact.

As your retirement savings balance increases, you may find yourself tempted to withdraw funds, either for an emergency or some other need. In fact, according to Principal research, each year about 30% of people with retirement savings have either withdrawn funds or taken a loan. Any early withdrawals that aren’t classified as hardship hurt your savings in a couple of ways. You’ll pay income taxes at your current tax bracket, on top of a whopping 10% early withdrawal penalty. Plus, those funds no longer offer growth potential.

Sri Reddy, senior vice president of retirement and income solutions at Principal, has noticed a trait that separates normal savers from super savers—and that likely keeps them from ever touching retirement savings. “If there’s one common trait of the super savers, it’s that they are dogged savers that are laser focused on accruing enough wealth to create a better financial picture for themselves,” says Reddy.

There’s no hard and fast definition of a retirement super saver, but some point to the 15% threshold as a tipping point. 

Wherever you’re at in your savings rate, you can increase it gradually, versus all at once. The incremental approach can be done with 1% a year, or with a single yearly deposit (say, a tax refund or bonus). If you can increase your savings rate, you have a better chance of maintaining your lifestyle when you retire. Unfortunately, about four in 10 Americans who work are in danger of a decline in their way of life.. “The most important thing to consider before retiring is if you have enough savings and/or additional income to support your desired lifestyle,” Reddy says. “While we all have our own retirement dreams, you need to be able to cover your necessary living expenses. If you feel confident [you can] cover those necessities, you can consider if you have enough saved to achieve your long-term retirement goals.”

People who consider themselves super savers for retirement do spend on other things. They just prioritize saving, too. “From how you choose places for a vacation to how you make charitable donations, it’s all about what you value when making financial decisions,” Winston says.

To translate priorities into realities (and perhaps one day become a retirement super saver), you’ll have to find a method to track goals and spending. Plenty of people¬—about 20%—use an app, but others (about 45%) still sit down with pen and paper. (If you’re a Principal customer, you can use the budgeting tool, available after you log in.)

One financial topic Winston’s parents skipped was credit cards. She signed up for one in college, treating it as “someone else’s money to pay for what I thought I needed,” she says. “When the bills came and my on-campus jobs weren’t enough to cover them and my tuition, it was humbling.”

Debt is very often the thing that prevents people from saving, and sometimes debt happens when there aren’t resources to pay for an unexpected event. An emergency fund can help. “Having emergency savings protects your future self from having to take on debt at inopportune times,” says Winston.

People use all sorts of tricks and habits to stay centered on their future and stick to their goals. Some choose to buy a home that’s well below what their budgets could absorb. Or they buy an old car to skip the necessity of getting a car loan. Others may figure out monthly spending, and put an additional fraction of that back into savings.

And some savers get derailed—but they get back up and save again. Twenty percent of people stopped saving for retirement at some point in their lives, but nearly 80% of those folks restarted. For those saving at least 15%, a diverse savings strategy—a 401(k) and an IRA, for example—helps.

The goal is simply to save as much as you can, for as long as you can, as life ebbs and flows. “Super savers bet on themselves, which means things like volatility and inflation don’t shake them from their financial goals,” Reddy says. “They embody some of the best practices in retirement savings, so they prioritize consistency and preparation.”