Many Gen Xers and Gen Yers deferred 90% or more of the Internal Revenue Service (IRS) maximum allowance for contributions to their retirement accounts, according to research by Principal Financial Group. More than half saved more than $20,000 for retirement in 2017.
Asked why they are maxing out their savings, 65% said it is to “have a good life in retirement,” and another 47% said it is to pursue their passions in retirement. Seventy percent of those maximizing their savings are doing so without a formal budget in place. Instead, they are sacrificing other expenses, with 41% limiting their travel expenses, and 31% of Gen Yers owning a modest home. For both generations, high work-related stress, cited by 44% of both Gen Xers and Gen Yers, comes alongside the desire to max out retirement savings.
Seventy-two percent of these “super savers” learned nothing or very little about personal finance in school. Instead, 41% say their parents influenced their savings habits.
“There is no better advice I can give anyone than save more, earlier,” says Jerry Patterson, senior vice president of retirement at Principal Financial Group. “There ‘super savers’ are making sacrifices today that should help set them up to have the freedom to do the things they want in the future.”
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