While “The Secrets of Super Savers” would be a catchy name for a reality TV show, there’s really no mystery to developing good savings habits.
Ideally, you need to monitor your spending, start setting aside savings early, put your savings on autopilot and take advantage of all the tax breaks and other incentives available to you. In a 2022 survey of investors’ savings habits, Principal Financial Group identified super savers as those who set aside 15 percent or more of their salary in retirement accounts or make 90 percent of the maximum contribution allowed by the Internal Revenue Service (IRS).
A common characteristic among the super savers is consistency. Most started saving in their teens or early twenties and consider it part of their identity. They drive older vehicles and own modest homes, which they fix up and clean themselves. In addition to contributing to 401(k) plans or other employer-sponsored accounts, they take advantage of other vehicles such as brokerage accounts, health savings accounts and 529 college-savings plans.
“They’re continually looking for as many ways as possible that they can save,” says Principal’s Heather Winston.
When you’re starting out, finding room in your budget to save for retirement can be a challenge. But recent research from the Investment Company Institute offers encouraging news about young adult savers. The ICI’s analysis found that in 2022, members of Generation Z—typically defined as individuals born between 1997 and 2012—had two and a half times more assets in retirement plans than Generation X households had when they were the same age (Gen Xers were born between 1965 and 1980).
Contributing to the trend is the rise in automatic enrollment, according to the ICI. More than three-fourths of large companies automatically enroll workers in their 401(k) plans. Workers who don’t want to participate can opt out, but most don’t. Starting in 2025, companies with new 401(k) plans will be required to automatically enroll workers at a minimum contribution rate of 3 percent and increase participation by one percentage point each year, up to 15 percent.
However, if you want to be a super saver, you should put aside even more than the default contribution embedded in your employer’s plan. In 2024, you can stash up to $23,000 in 401(k) and other employer-sponsored plans, or $30,500 for workers 50 and older. Contributions are tax-deferred if you invest in a traditional 401(k). With a Roth 401(k), contributions are after-tax, but withdrawals are tax-free in retirement.
Your employer-provided plan isn’t the only device in your retirement toolkit. More than half of Principal’s super savers also contributed to a Roth IRA, which provides tax-free income in retirement. In 2024, you can make the maximum contribution of $7,000 to a Roth—$8,000 if you’re 50 or older—if your modified adjusted gross income is less than $146,000 if you’re single or $230,000 if you’re married and file jointly.
