The Principal Financial Group surveyed “younger” retirement plan participants ages 23-51 who contributed at least 90% of the annual 401(k) maximum limit. That means they put away at least $16,200 each (limit was $18,000 for 2016/2017). These “young super savers” made savings a high priority, so they were asked about the areas in which they made sacrifices. Here are some of the top answers:
- Cars. 47% of “super savers” drive older vehicles in order to help maximize retirement savings.
- Housing. 45% of “super savers” choose to live in modest homes to boost savings. 18% of millennial supersavers are renting.
- Vacations. 42% are opting to travel less than they would prefer.
- Work. 40% say they put up with work-related stress. 27% put in extra hours instead of spending time with friends and family.
In a separate survey, Vanguard found that overall 10% of plan participants contributed the full maximum to their 401ks. (Note that “plan participants” means people offered a Vanguard 401k option that then also chose to participate.) Here’s how these 401k “super savers” broke down by income and age:
If you make a modest income and max out your 401(k), you are definitely doing something differently. Roughly 95% of people who make less than $100k aren’t maxing out their 401(k).