Despite a global pandemic and recent market volatility, “super savers” are continuing to save big for their retirement, according to a recent survey by Principal Financial Group.
Super savers, defined as Gen X, Gen Y, and Gen Z retirement plan participants saving 90% or more of the IRS maximum or 15% or more of their income for retirement, have maintained financial confidence and a focus on long-term goals throughout the COVID-19 pandemic.
“It’s important to unpack the key motivations and drivers of super savers so that we can better understand how to inspire and encourage long-term thinking and positive savings behaviors across our customer population,” said Jerry Patterson, senior vice president of retirement and income solutions at Principal. “This latest survey indicates super savers are taking the current market volatility and uncertainty in stride—identifying new opportunities to save and invest—while feeling fairly confident as most already live below their means and have a solid savings cushion.”
According to the research, 97% of super savers report feeling comfortable to manage their finances through uncertainty and many are committing even further to their long-term financial goals.
How are they doing it? By favoring long-term sacrifices over short-term cuts to their daily expenses to max out their retirement contributions. And despite recent market volatility and a global pandemic, super savers have maintained financial confidence to bolster their savings, with the overwhelming majority (97%) saying they feel comfortable managing finances through uncertainty.
How super savers are responding to COVID-19
While the market has seen ups and downs since the onset of COVID-19, super savers are largely staying, and playing, the course.
- 95% say they’re in good shape to endure a recession
- 81% will save even more money going forward since they can’t count on steady equity market returns
- 75% view the current market as a buying opportunity
- 30% have invested additional money in the market over the past few months
What motivates super savers?
Super savers are intrinsically motivated. Most (70%) say they just want to feel financially secure. In 2020, the most important things in their lives are health (52%), financial security (45%) and having a close-knit family (41%). One-third say parents are the largest influence on their savings habits, with 81% saying their parents are/were savers.
School, on the other hand, was little help with an overwhelming majority (83%) saying they learned little or nothing about personal finances in school.
The top motivations for high savings rates among super savers are:
- Having the income to do so (73%)
- Wanting to feel financially secure (70%)
- Want to have a good lifestyle during retirement (61%)
- Want to be prepared for the unexpected (51%)
- Want to travel in retirement (48%)
To reach their lofty savings goals, super savers make sacrifices, such as:
- Driving older vehicles (48%)
- Owning a modest home (42%)
- Not traveling as much as preferred (39%)
- Cleaning their own home, instead of hiring a housecleaner (39%)
- Doing DIY projects instead of hiring outside help (38%)
“There’s a lot we can learn from super savers in terms of making really good, but really difficult choices,” added Patterson. “For folks who are looking to boost their savings, it’s O.K. to start with small, positive choices that begin to snowball into a more substantial nest egg.”
What worries super savers now
Despite keeping their focus on long-term savings, super savers report several concerns around COVID-19, such as:
- Small businesses in their community weathering closures (93%)
- U.S. economy in deep recession for a protracted time period (91%)
- COVID-19 cases will spike in the fall (88%)
- Coronavirus spreading in their community (85%)
- The ability of others to social distance (83%)
Super savers also are showing concerns about Social Security, with nearly a third (32%) saying they are losing faith in it for retirement. Just 31% say they’ve included estimated Social Security benefits in their retirement planning.
Check out the full Principal super saver research here.
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
