Principal Financial Group found that some members of Gen X and Gen Y, those under the age of 52, are either maxing out the Internal Revenue Service (IRS) limit on 401(k) contributions, i.e., $18,000, or contributing 90% or more of this limit, i.e. $16,000 or greater. This group, which Principal dubs “Super Savers,” is twice as likely to say they are saving for retirement (90%) than raising a family (40%).
In order to save this large amount of money, they are making several sacrifices. Forty-seven percent are driving older vehicles, and 45% are living in modest homes. Among Millennials, 18% are renting rather than buying their home.
Forty-two percent have cut back on vacation travel. Forty percent say they put up with work-related stress, and 27% are putting in extra hours at work.
“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 milestone 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.’”
Principal’s findings are based on a survey of 2,424 retirement plan participants between the ages of 23 and 51 who have either reached the IRS maximum contribution to 401(k)s or are 90% of the way toward the max or more.