Are millennial ‘super savers’ changing retirement?
More younger workers are prioritizing saving for their post-work years and contributing as much as they can to their 401(k)s.
YOUNGER EMPLOYEES often get a bad rap for their money management and savings habits, but there is a small group of Gen Xers and millennials who are doing everything right.
New research from Principal Financial Group found that there are a number of Gen X and Gen Y savers who are deferring 90% or more of the IRS maximum amount to their 401(k) accounts, which is between $16,200 and $18,000 per year.
Of those individuals, 91% listed saving for retirement as one of their main goals. In fact, millennials are twice as likely to say they are saving for retirement (90%) than raising a family (40%), Principal Financial finds.
“These ‘super savers’ are incredibly driven,” says Jerry Patterson, senior vice president of retirement and income solutions at Principal. “We see them making sacrifices to achieve their goals, and sometimes that includes delaying milestones until they feel financially secure. 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.’”
Much of the financial conversation is around what different generations are doing wrong when it comes to money management. Principal Financial Group wanted to look at people who were making good decisions to see what they were doing to move the needle on financial security.
Super savers also take fewer vacations, drive old cars and buy smaller homes than they would like.
Super savers are willing to “make modest impacts on their standards of living today and those impacts will have a huge implication on their standard of living 20 to 30 years from now,” Patterson says. “These people made positive, sometimes hard sacrifices.”