Those that are fully committed to their retirement have a certain type of mindset and often sacrifice in the short term so that they are better off when it comes to their actual retirement.
A study that Principal Financial Group did shows that nearly 60% of those surveyed were looking to put away a whopping $20,000 into their retirement in 2022. This is up from just over 50% in 2021.
Of course, it’s important to note that this is with a belief and assumption that people will continue to save even through dire times such as a recession.
Sri Reddy, who works at Principal Financial Group as a Senior Vice Present of retirement and income solutions, had this to say “Those who would fall into the ‘super saver’ category have the willpower to keep the way even when the market is uncertain.”
Jonathan Brown, who is the CEO of Dealflow Brokerage in Atlanta, also added, “These are people that are beyond your typical saver. They don’t just save but have the discipline to focus on their own financial budgets and cut out costs that are deemed unnecessary, as well as have the vision to save as much as they can.”
Savings for retirement seem to go into super drive with this category of people. A ‘super saver’ tends to have a high fixed amount of the income they save which is up to 15% in their retirement accounts. They also make sure that all their other obligations and bills are paid on time.”
How they do it
Financial goals that are solid
This is where it starts, and having the right milestones is key.
Brown adds that “they actually follow your standard SMART goals.”
This way, the saver is looking at it really as a fixed cost versus saving. This is on top of an emergency fund.
Brown continues, “You will rarely see these types of savers with a lot of outstanding debt. This is because they don’t spend their funds on frivolous things.”
When possible – Automate
Those that save the best use technology to automate it where possible.
Walli Miller, who founded Financially Thriving, which helps people with managing their money and financial coaching, said that “I had something similar to a 401(k) plan and didn’t feel I could ever max out my contributions. Since it was automated, I would increase it periodically by around 1%, and in no time, I hit the max.”
Savings is the Priority
Miller goes on and says that she herself was careless with money in her early career. Eventually, she built a more focused mindset.
“Those that are saving extremely well don’t focus on it as a negative or a sacrifice, but simply as a way to achieve their goals.” She adds
A great example is those in higher tax brackets where contributions can help reduce their tax burden.
“These plans for retirement come with a slew of tax advantages, meaning it’s a win-win for the long-term saver. For those in lower incomes, then consider a Roth IRA or a similar option that’s built for tax-free growth,” Miller continues.
Maximize at the least to what the employer will match
Another great area is ensuring that the employer has a matching offer or contribution to do the same.
“This is equal to free money and to your overall retirement goals.” Adds one of the founders of Flagship Asset Services , Derek DiManno.
Grow your contributions as your income grows
This naturally happens since it’s a percentage of your overall income, but you should actually increase that percentage.
“as you get better with your expense management or get a higher income, you want to gradually increase where possible where it doesn’t affect your day-to-day life.” DiManno adds.
Being creative with how they save
With a savings-first mindset, these people think differently when more money comes their way.
“When a super saver gets more money, even as a bonus, they will put most of that towards retirement.” Andrea Woroch says, who runs her own company from AndreaWoroch.com
Woroch adds, “This money isn’t missed as the savers have already budgeted their lifestyle, meaning that the extra funds are best used for retirement.”
She goes on with the creative way to reduce expenses: “They are always finding ways to cut costs, from the phone and cable bill to increasing what their deductible is to reduce their monthly premiums.”
Maximizing their tax breaks
Those that are considered in the super saver class really do understand and use the tax credits and deductions out there. That’s because they are reducing their income with their retirement plans that go into tax-deferred plans. Even those with a lower income still have access to a tax credit focused on savers.
They work on a no-debt lifestyle
This is for dangerous/unsecured debt, especially credit cards.
“A balance on your card means paying interest instead of putting more money into retirement.” Says Woroch. She says it’s best to use a credit card with a balance transfer promotion to help consolidate and reduce interest payments.
They optimize their retirement funds
That means less fees to pay. Typically even having a retirement fund has something known as an expense ratio which is the cost of the fund itself. A supersaver will check how much these fees are and select options that offer similar performance for a lower price.
DiManno also adds, “Look for those funds that are at the lowest cost, such as ETFs or index funds. You will be getting a good exposure at an optimal price.”
They are a stickler at avoiding fees
Some of these accounts for retirement come with fees that can be avoided. These can be hefty penalties, such as the 10% fee for an early withdrawal. There’s a penalty typically if money is also not taken out when you reach a certain age, so always be aware and know what the exceptions are.