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There's a pocket of employees who save a lot in their employer-sponsored retirement plan. Meet the super savers — last year they saved a minimum of $17,550 or deferred 15% or more of their salary.1
Super savers: everywhere and anyone
Super savers come in all ages and income levels. In our research, 50% were age 40 or younger and 53% made less than $100K annually. Among Gen Z super savers (ages 18-25), 28% have an annual salary of less than $35K, with deferral rates of 15%+.
Super saving isn't so much about income — it's more about habits and lifestyle. Highly influenced by their parents and their upbringing, they understand that making long-term decisions or sacrifices now equates to the retirement they envision in the future.
Employer-sponsored retirement plans play a strong role
Employers are key. In fact, their sponsored retirement plans can be the "nudge" for many to start saving. Just the presence of a retirement account gave them the confidence to start putting away for that long-range goal.
In addition to their 401(k) or 403(b), super savers also save through other accounts: 51% have a Roth IRA, 46% a heath savings account (HSA), and 32% a traditional IRA.
7 plan design updates to help more Gen Z employees become retirement super savers
A few simple updates can help modernize your employer-sponsored retirement plan to prepare for the newest generation of workers.
- Provide immediate eligibility and vesting. Among Gen Z super savers, 87% say their employer-sponsored retirement plan will be their main source of income in retirement.
- Start, increase, or stretch an employer match to incentivize participants to increase their contributions.
- Implement automated plan design features (automatic: enrollment, increase, and sweep).
- Provide more education around other retirement savings options such as an IRA, Roth IRA, HSA (if available), and guaranteed lifetime income products.
- Offer more investment options within the sponsored retirement plan, such as managed accounts.
- Establish financial wellness programs that include building emergency savings and providing education on investments.
- Provide access to a financial professional and online financial resources to help employees manage their savings goals. Among super savers, 48% say a financial professional or advisor is their top trusted source for financial information.
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This post was created by Principal with Insider Studios.
1 The 2022 Principal® Super Saver Survey was sent to Gen Z, Gen X, and Gen Y participants who work for companies that have Principal as the recordkeeper for their retirement accounts and have either saved 90% of the 2021 IRS max allowed under a retirement plan or deferred 15% or more of their salary to a retirement account. The survey was conducted from June 24 to July 5, 2022.
Guarantees are based on the claims-paying ability of the issuing insurance company.
The subject matter in this communication is educational only and provided with the understanding that Principal® is not rendering legal, accounting, investment advice, or tax advice. You should consult with appropriate counsel, financial professionals, and other advisors on all matters pertaining to legal, tax, investment, or accounting obligations and requirements.
Principal® does not make available products related to health savings accounts.
Insurance products and plan administrative services provided through Principal Life Insurance Co., a member of the Principal Financial Group®, Des Moines, Iowa 50392.
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