A new study shows that “super savers” have good money habits far beyond building their nest eggs. Principal’s 2022 Super Saver Survey found that most workers pay their bills on time (87%) and don’t go overdrawn on their checking accounts (74%). Their 401(k) contributions are at least 15% of their pay or 90% or more of the maximum allowed.
Approximately 1,120 people, ages 18 to 57, with incomes ranging from less than $35,000 to more than $500, were surveyed for the report. It comes when inflation is high, interest rates are rising, and some people are talking about an economic recession. The Principal’s idea of a “super saver” fits everyone who was asked o participate in the survey.
Even though the idea of becoming a “super saver” might seem scary, experts say that making small changes to habits and lifestyle can go a long way toward helping workers save more.
Aiken, South Carolina-based financial planner Kathryn Hauer says she tells people that good money habits aren’t too different from good eating habits. The best way to stay thin is to think about every bite of food you eat, while the best way to become wealthy is to carefully consider every dollar you spend, Hauer said.
Supersavers drive old cars and don’t worry about the stock market.
Principal asked the people surveyed what “sacrifices” they have made to save for retirement. For example, 49% drive an older car, 40% don’t travel as much as they’d like, and 39% own a modest home. They’ve also taken steps to change how they think about money. A lot of people (69%) don’t worry about “keeping up with the Joneses,” and more than half (56%) don’t lose sleep over their finances.
Even though the stock market is volatile, it hasn’t scared off super savers: Almost three-quarters of them think the current market situation is an excellent time to buy because they can get shares at a discount.
This point of view comes when the major indexes are down by more than 10% this year.
Changes in habits can help save more money.
Some families may not have much or any room in their budget to save more for retirement, but others may need to change how they spend to make more money available for long-term savings.
Hauer said that when people have “an intense emotional moment,” they spend more money, making them make decisions they might not otherwise make.
Hauer said it could happen when you’re in a store looking for the perfect prom dress for your daughter or at a car dealer and get excited about the cool extras on a car. If it’s hard for you to save more for retirement regularly with your current budget, try putting away any extra money you get, like a birthday gift or some of your tax refund. Hauer said to put the money you get as a surprise into a retirement account.
A worker can contribute up to $20,500 in their 401(k) in 2022. An additional $6,500 can be contributed by those aged 50 or older in “catch-up” contributions. The most you can put into an individual retirement account in 2022 is $6,000, plus an additional $1,000 as a “catch-up” amount.