At Extreme Investor Network, we understand the importance of reaching your retirement savings goals. A retirement savings crisis is looming for many Americans, but there is a glimmer of hope for those known as “super savers.” These individuals are putting away more than 10% of their salaries toward their retirement plans, according to research from the Transamerica Institute and Transamerica Center for Retirement Studies.
In a recent study of over 5,700 U.S. workers, it was found that more than half of workers are saving 10% or less of their annual pay. On the other hand, 44% have reached super saver status, with 15% of workers contributing 11% to 15% of their pay toward retirement, and 29% contributing more than 15%.
Super savers can be of any age, with Generation Z leading the pack in terms of the highest percentage of super savers. However, accumulating a large retirement balance takes time and dedication. As Ted Jenkin, a certified financial planner, advises, there are no “microwave millionaires.” It takes consistent contributions over many years to reach significant savings milestones.
To put things into perspective, currently, 401(k) savers can generally contribute up to $23,000 this year, or $30,500 for those 50 and over. New research from Vanguard shows that only 14% of the firm’s defined contribution clients reached these maximums in 2023, with high earners and older participants being more likely to reach these limits.
Experts recommend focusing on your savings rate rather than just your account balances to achieve super saver status. Recent data shows that the average total 401(k) savings rate is on the rise, with more employees contributing close to the recommended 15% savings rate.
For those looking to increase their savings rate, the rule of thirds is a helpful concept to keep in mind. Whenever you receive a pay raise or bonus, allocate one-third to taxes, one-third to increasing savings and investments, and the remaining one-third to enjoying life. By following this rule and making incremental increases in your savings rate each year, you can work towards building a substantial retirement nest egg.
Don’t fall victim to the retirement savings crisis – join the ranks of the super savers and secure your financial future with strategic savings habits and smart investment decisions. Stay tuned to Extreme Investor Network for more personalized finance tips and exclusive insights to help you achieve your financial goals.