Living modestly now in order to have a bigger nest egg down the road is a thing for a subset of Gen X and Gen Y Americans referred to as “super savers.”
These super savers, defined as those saving 90% or more of the IRS maximum or 15% or more of their income for retirement, cite numerous sacrifices and motivations for saving, according to new research from Principal Financial Group.
Super savers are highly motivated by wanting to feel financially secure (62%), having a good lifestyle in retirement (57%), being prepared for the unexpected (43%), wanting to save enough for retirement (42%) and travel in retirement (42%).
The survey found 71% of super savers started saving for retirement when they were in their 20s, with the median age being 25 for Gen X and 24 for Gen Y.
In order to reach their lofty savings goals, super savers make sacrifices such as driving older vehicles (43%), owning a modest home (41%), not traveling as much as they’d prefer (41%) and doing DIY projects instead of hiring outside help (40%). Taking on DIY projects increased drastically, up from 30% in 2018.
Super savers aren’t all work and no play. They still splurge on subscription services (46%), travel (46%), dining out (39%) entertainment (30%) and shopping (26%).
“Super savers are making smart financial choices, but they aren’t sacrificing their quality of life,” said Jerry Patterson, senior vice president of retirement and income solutions at Principal. “We make time for the things we find most important, and this group has prioritized savings and financial independence in a big way.”
The concept of young Americans saving big might sound foreign, but the growing FIRE (Financial Independence Retire Early) movement has been a rallying cry for young people. Seeking financial freedom, some of these young savers can bank 70% of their take-home income into savings.
The role of family
By and large, super savers list their parents as their top influence on their savings habits (34%). Eight in 10 said their parents were or are savers, and a third (35%) said their parents created savings rules for them to follow when they were children.
Perhaps one of the reasons super savers turn to their parents is a lack of personal finance education in schools. Eighty-one percent said they learned little to nothing about personal finance in school, but 98% agreed that students should learn about it before graduating high school.
“What these super savers have figured out, and what we want more people to realize, is the value of saving more, earlier,” added Patterson.
Confidence in saving
Though everyone surveyed fit the definition of a super saver, only 24% self-identified as a such.
Of those who thought they were a super saver, 28% were men, compared to only 19% of women. Men were also much more likely to be confident in their financial future (59%) compared to women (49%) and be confident in financial decision making (52% vs. 40%.)
“We know that education drives confidence, and confidence drives action,” added Patterson. “Even investing a small amount of time learning more about personal finance can have a huge boost to confidence.”
- Click HERE to view the complete 2019 Super Saver survey results
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.
