A big part of being good with money is figuring out how to balance spending for now and saving for later.
Principal, a financial firm that manages retirement plans, recently surveyed over 2,000 workers who contribute aggressively to their 401(k) plan to uncover their saving and spending habits and plans for retirement.
The firm identified “super savers” as those who either contributed 15% or more of their salary or saved 90% to 100% of the maximum annual contribution of $18,500 in 2018. “Pre super savers” were defined as those who either deferred between 13% and 14.99% of their salary to their 401(k) or saved 70% to 89% of the maximum contribution.
While the salaries of the plan participants weren’t revealed, the survey found that many of them are making the same sacrifices to save more. More than 40% of the super savers and pre super savers said they drive older vehicles, live in a modest home, travel less than they prefer, and do DIY projects instead of hiring outside help. Of the super savers specifically, a whopping 70% began saving in their 20s.
They also have something else in common: They seek professional help for their money. Forty-one percent of super savers and 42% of pre super savers say they work with a financial adviser, while 21% and 20%, respectively, say they plan to in the future.
While the majority of savers use online tools to verify whether they’re on track for retirement, more than one-fourth say they consult a financial adviser to compare information.
But surprisingly, these savers also say their advisers don’t have significant influence on their savings habits — that honor goes to their parents, their spouses, and themselves.
Finding the gumption to start saving for retirement at 25 can be challenging — no one wants to feel like they’re sacrificing the joys of today for the promise of tomorrow. Financial advisers help clients strike a balance between taking care of priorities today and setting up a rich future.
A survey from Northwestern Mutual found that 61% of people who work with financial advisers have “clarity on balancing spending now vs. saving for later,” compared to 50% of people who don’t work with a professional.