Ah, young people. If you’ve ever skimmed buzzy articles throughout the day, you’ve likely seen headlines like Here’s What Millennials Are Prioritizing Instead of Retirement or Why Millennials Aren’t Saving Enough Money to Retire. Juicy stuff, right? These articles suggest that young folks only want to experience the here and the now, and imply that they aren’t concerned with financial planning for the road ahead. In the spirit of embracing 401(k) Day, our partners at Principal have compiled interesting research that might surprise you.
A recent study shows that there is a group of “super savers,” all aged 53 and younger that is setting a new bar in terms of retirement planning. This group of Gen X and Gen Y savers defer 90% or more of the IRS maximum amount to their 401(k) amount, which ranges anywhere from $16,000 – $18,000 annually (not including matching from their employers). We’ve done research on our participants who fall into this category and the intel is insightful.
There’s no doubt this group is driven to reach their savings goals. But what motivates them to get it right when it comes to retirement? Even though leaving the workforce is far off for these “super savers,” 91% list saving for retirement as one of their main goals. In fact, more than twice as many millennials say they’re saving for retirement (90%) than raising a family (40%).
Three Ways to Become a Super Saver
When asked how they do it, many say it’s a matter of prioritization and making small sacrifices today to help better prepare for tomorrow. These three tips will have you shaping up in no time:
- Drive a seasoned ride: Nearly half of “super savers” drive older vehicles (47%) in order to direct dollars to their retirement savings.
- Keep housing in check: Cars aren’t the only carefully considered big ticket purchase. Super savers often choose to live in modest homes (45%) and, among millennials, 18% are renting versus buying.
- Travel smart: “Super savers” also prioritize retirement savings over the vacation fund and many say they’re traveling less than they’d prefer (42%).
By embracing these tips and setting aside the maximum early in their careers, this “super saver” force may have found the secret to affording the life they want in retirement. For instance, contributing just $100 per month starting at age 25 could add up to around $127,200 in retirement. But by waiting until 40 to start saving, that same amount may end up around just $34,000.
As shown above, even small steps taken today can have a significant impact on your personal savings over time. Various plan features like automatic deferral increases can help you and your employees gradually contribute a little more each year.
Interested in discovering how Zenefits partners with best-in-breed 401(k) providers to give your employees the tools they need to be successful? Learn how you can get started through your Zenefits dashboard today.
This document is intended to be educational in nature and is not intended to be taken as a recommendation.
Insurance products and plan administrative services are provided by Principal Life Insurance Company, a member of the Principal Financial Group®, Des Moines, Iowa 50392.
HZ2756 | t17082207md | 9/2017