‘Super Savers’ Staying on Track Despite Pandemic
While the pandemic is creating economic turmoil for many, a subset of aggressive savers is continuing to move confidently toward their financial goals.
With unemployment up from pre-pandemic levels and consumer confidence falling, global financial services provider Principal Financial Group set out to find out whether the most ardent savers are saving less in light of the pandemic. It surveyed a group of investors between the ages of 20-54 who save either 15% or more of their income in retirement accounts, or at least 90% of the amount allowable by the Internal Revenue Service.
Those investors, dubbed “super savers” by researchers, have not only continued their aggressive saving habits, but they are focusing on long-term goals rather than the uncertainty of the COVID-19 outbreak.
The impact of COVID-19
The vast majority of respondents — 95% — said they either “somewhat” or “strongly” agree that they are in good shape to endure a recession.
Many are even planning to save more money than before because a turbulent stock market could keep them from enjoying steady investment returns. Nearly a quarter of respondents — 23% — “strongly agree” they will save more during the pandemic and another 58% “somewhat agree” with that notion. Nearly one-third have already started, with 30% saying they have invested additional money in the market in the past few months.
Those findings are in line with an earlier survey that suggested that younger consumers were motivated to save more because of the pandemic.
According to the Principal Financial Group survey, supers savers are also looking at a brighter side to the pandemic. Three quarters — 75% — said they view the current market as a buying opportunity.
While 43% of super savers did not expect to receive an economic impact payment as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), 29% said they saved their payment in a savings account while 10% invested it.
Financial security a top motivator
While 73% of super savers admit that they save because they have the income to do so, 70% said they do so in order to feel financially secure. Other motivations for saving include:
Wanting to have a good lifestyle during retirement (61%)
Wanting to be prepared for the unexpected (51%)
Wanting to travel in retirement (48%)
Super savers are also willing to make sacrifices to have more money to put toward retirement, such as:
48% drive older vehicles
42% own a modest home
39% don’t travel as much as they would prefer
39% said they don’t hire professional house cleaning services
38% said they take on do-it-yourself projects rather than hiring outside help
Super savers are also more likely to have hefty emergency funds, with 30% having a fund that will last more than a year, 22% having a fund that will last 7-12 months and 34% having a fund that will last 3-6 months. Only 8% have had to tap into their emergency fund this year.
Methodology: Principal Financial Group surveyed 1,703 retirement plan participants between the ages of 20-54 during the period of June 12-22, 2020. All survey respondents save in retirement accounts at least 90% of the amount allowed by the IRS, or at least 15% of their income.
