Analysis: Some millennials super-serious salary savers

Fidelity finds 20% of its Gen Y 401(k) participants save big

Iron Man. Wonder Woman. Millennial Super Saver.

He or she is an ordinary human, 18 to 34, who saves at least 15 percent of his or her salary each year in a 401(k) retirement savings plan. The mission: Save enough to retire comfortably. Or at least retire.

An analysis by Fidelity Investments of the 13 million participants in 401(k) plans it administers found close to 421,000 of those young “super savers,” as Fidelity calls them, accounting for almost 20 percent of the millennial savers in its database. They save an average of 11 percent of their salaries; the other 4 percent comes from a company match. The overall average millennial contribution rate is 6.6 percent, which rises to 11 percent with a match.

It helps that millennial super savers make a lot more money than their non-super-saving peers. The average big saver in the 18-to-34 age range makes $73,000 a year. That’s compared with the $46,000 average for non-super-savers. Saving can be tough for everybody, but saving when you have a salary that’s 23 percent higher than the median for your peers is less painful.

Gen X super savers, meanwhile, had average salaries of $108,900, compared with $68,000 for Gen Xers (ages 35 to 50) who didn’t save as much in their 401(k). (Across the millennial and Gen X cohorts, the earnings gap between super savers and those who can’t manage to save 15 percent or more of their salary is 58 percent.)

That salary difference enables those higher-earning millennials to save about $4,900 more a year than their peers. And that, in turn, gets them higher average employer matching contributions. The average overachieving millennial saver has an account balance of $43,000, compared with $11,000 for non-super-saver peers.

Saving 15 percent or more is something to aspire to. But starting to save early, and saving consistently, can also take people a long way. Fidelity found that millennials saving less than 15 percent but also saving consistently for 10 years had balances of over $100,000. And there are young workers earning six-figure salaries who don’t save at all. The key is being proactive and staying the course when markets get chaotic.

The super-saving ways of these millennials may have come from watching the pain the 2008-2009 stock market turmoil inflicted on baby boomers. A 2014 survey by T. Rowe Price found that millennials tend to have better financial habits than boomers. The Fidelity data show that 80 percent of the millennial super savers actively enrolled in their 401(k) plans rather than being automatically enrolled when they joined the company.

And how are these precocious savers investing their 401(k) money?

Some 63 percent of the millennial big savers at Fidelity aren’t invested in a way the company considers “age-appropriate” — their portfolios don’t hold between 90 and 95 percent in equities.