7 Secrets of Retirement ‘Super Savers’

“If you're a saver now you can earn 3, 4 or 5 percent,” he says.

3. Set ambitious goals

The most successful savers think big, and their goals have increased significantly in the last two years, the Principal study found.

Nearly all of those surveyed — 95 percent —have increased their goal to feel more financially secure and hedge against future inflation. While having $1 million in hand is often touted as a retirement benchmark, 29 percent of Gen X super savers and 35 percent of millennials say they aim to have at least $3 million.

Setting a goal is one thing; funding it is another. One way to get there is to max out on tax-deferred contributions to a retirement savings plan.

For the 2023 tax year, you can contribute up to $22,500 to a 401(k) or similar plan and up $6,500 to an IRA, under IRS regulations. People ages 50 or older can make catch-up contributions that raise those limits to $30,000 and $7,500, respectively. In 2024, the caps go up to $23,000 for a 401(k) and $7,000 for an IRA ($30,500 and $8,000 for 50-plus savers).

4. Live — and spend — simply

The Principal study found that the best savers are strategic in how they spend. They are content to drive older vehicles or own a modest home. They travel less frequently than they might like, don’t carry credit card debt and go the DIY route for household projects. Seventy percent have an emergency savings account with enough in it cover at least three months of expenses.

But not living like a prince doesn’t mean you have to live like a pauper. Being thrifty in some areas makes super savers more comfortable splashing out in others, like dining out regularly or taking a deluxe vacation when they really want it. More than half of Principal respondents cited being able to splurge when they want to as a reason financial security is important to them.

5. Put saving first

“Most human beings spend what they need, then they look at, ‘Do I have anything else left to save?’ ” Reddy says. “The super savers, one of the things that is innate to them is they prioritize saving first, then they spend everything else.”

That means incorporating saving into your budget, like you do with bills. Know how much you can set aside each month and stick to it. If you’re mid-career, “you probably have more disposable income now than you've ever had in your life” and can save more, Reddy says.

Putting savings first also means resisting the temptation to make early withdrawals from retirement accounts to cover big expenses like a dream vacation or a child’s college tuition. Reddy recommends approaching such things in ways that allow your retirement funds to keep growing. For example, if your child takes out a student loan, you can help them repay it over time. Delay that big trip until you’ve saved enough cash to cover it.

The most effective savers “never say to themselves, ‘Oh, I'm going to dip into my retirement accounts,’ ” Peters says. “They look at that as being off-limits.”

6. Automate your saving

It might sound counterintuitive, but the best savers don’t spend all their time thinking about how to save. “The folks that really do well when saving for retirement save without thinking about it,” Peters says.

That’s one of the big advantages of workplace retirement plans, which take money out of your paycheck and deposit it directly into an investment account. The most successful savers not only enroll in a 401(k) or similar plan if available; they preset their contributions to increase each year, says Mike Shamrell, vice president of thought leadership for Fidelity Investments.

With this “automatic escalation,” you can set your pretax contribution to go up by, say, a percentage point each year, up to a maximum (typically 10 percent or 15 percent). Among Fidelity clients who boosted their contribution to a retirement plan in the third quarter of 2023, 73 percent had set the rate to increase automatically, Shamrell says.

7. Find multiple ways to save

The most effective savers look for more than one savings vehicle. An emergency account is important, but once it has enough to cover three to six months’ living expenses, you may not need to keep pouring money into it, Peters says. You could plow those funds instead into a 401(k) or other retirement account that will provide a better return over time.

Once you’ve maxed that out, explore other vehicles such as annuities, mutual funds, brokerage accounts and certificates of deposit (CDs).

Health savings accounts (HSAs) are another option, utilized by nearly half of the savers polled by Principal.

If you have a high-deductible health plan, you can make pretax contributions to an HSA and withdraw from it at any time, tax-free, to cover qualified medical expenses, including deductibles and copayments. You’ll pay taxes, and a tax penalty, if you take money out for other purposes — until you turn 65, after which you can withdraw from an HMA for nonmedical expenses with no penalty, just regular income tax.