Retirement ‘Super Savers’ shrug off inflation, recession, look to save $20K+ in 2022

Retirement “Super Savers” plan to save more for retirement this year than in 2021, ambitiously pursuing their goals despite the impacts of inflation and the threat of a potential recession, according to a new survey from Principal Financial Group.

In the annual survey, 59% of respondents said they planned to save more than $20,000 for retirement this year – up from 51% in 2021; 54% of Super Savers said they have increased their saving practices over the past 24 months.

“Super Savers bet on themselves, which means things like inflation and volatility don’t shake them from their goals,” said Sri Reddy, senior vice president of retirement and income solutions, Principal Financial Group. “Their financial experiences have given them the confidence to know that if they remain well-balanced, they can weather any economic storm.”

Principal’s online survey targeted retirement plan participants ages 18 to 57 who contributed $17,550 or more to a retirement plan in 2021, deferred 15% or more of their salary to their retirement plan last year or did both. The 1,120 survey participants replied to questions between June 24 and July 5.

The survey, which is in its sixth year, revealed a shift in priorities for Super Savers from 2021. Last year, the group cited paying off debt as their primary emphasis for the next two to three years, while this year continuing to save more in an IRA was the top priority – paying off debt tied for second with increasing the amount contributed to employer retirement plans.

“For many Super Savers, their debt tends to be more long-term and has been locked in at low rates,” Reddy said. “To illustrate, the primary debt of Gen X and Millennials (or Gen Y) is a mortgage, while Gen Z is car loans and student loan debt. With the Fed continuing to raise rates, we’d encourage people to rethink what they are paying down versus what they are saving for the future.”

More than a third of respondents made changes to their investments due to the volatility of the financial markets in the past year, but 82% said they were in good shape to endure the impacts of the inflation and a possible recession. In fact, Super Savers’ top financial concern was the cost of health care (35%), followed by inflation (33%) and recession (22%).

In response to this year’s down markets and inflation, 67% of Super Savers said they have made lifestyle changes to reduce expenses, including cutting costs in the areas of entertainment and travel, groceries and fuel. On the other hand, 57% said streaming services were the expense they were most willing to splurge on.

Meanwhile, 45% have not adjusted their investments. Of those who did make adjustments, the most common steps were to confirm asset allocation aligns with investment risk (34%) and to review asset allocation within retirement accounts to verify proper diversification (25%). Only 7% of respondents shifted money from investments experiencing a decline into less aggressive investments. In fact, 73% believe the current market is a buying opportunity.

“Super Savers aren’t new to saving – they’ve been consistently putting money away for a while,” Reddy said. “Money buys you choices, and for this group, they have more choices than not, both to fund their current lifestyles and tuck away for the future.”

Big changes in retirement planning 

Principal’s survey reflected some major trends in retirement planning. For instance, 54% of Super Savers now say that they are planning for a phased retirement – working less than 40 hours a week at a job outside their main career – which shows a striking 13% increase from last year. Similarly, this year’s survey showed that 66% of respondents plan to retire before 65, a 6% increase from last year.

Generation Z respondents, who are between the ages of 18 and 26, have the most ambitious plans, hoping to retire by age 57.5 on average, while Generation Y is right behind them with an average retirement age of 58. Forty-eight percent of Gen Z Super Savers plan to save more than $2 million by the end of their careers.

Overall, Reddy said Super Savers tended to share more in common across generations than to feature notable differences.

“For this group, the common factor of being savers drew them together more than anything else, even when looking at generations and attitudes,” Reddy said. “You might expect more highlighted differences across generations, but Super Savers generally prioritize financial education, continuous learning and saving for the future, no matter the age.”

To execute on their long-term retirement goals, Super Savers are primarily looking to financial institutions for support. Their No. 1 trusted source for information is a financial professional (48%). Financial company websites or mobile applications (40%) and retirement plan service providers (37%) placed second and third, respectively.