5 smart habits that 'supersavers' use to supercharge their retirement savings


A new study has teased out some of the ways "supersavers" put away an impressive share of their income for retirement.

The study, from retirement account provider Principal, highlights the saving methods of "supersavers," which Principal defines as millennials, Gen Xers, or members of Gen Z with Principal 401(k) retirement plans who saved more than 90% ($17,100) of the annual $19,000 limit during 2018, or deferred more than 15% of their salary. Principal's team says that 48% of supersavers earned less than $100,000 last year.

"We spend a lot of time in our industry talking about what people aren't doing. And what we love about this research is that we're finding people who are making good choices and good decisions," says Jerry Patterson, Principal's senior vice president of retirement.

The secret for many supersavers is spending less on big-ticket items like cars and housing.

"These people are not miserable," says Patterson. "The key part, the hard part, is that they're making hard decisions and sacrifices to balance what's best for their future selves."

Here are some of the main ways that "supersavers" cut costs so that they can supercharge their retirement savings.

This is a graphic showing the sacrifices super savers make, including driving older vehicles and owning modest homes.

1. They drive older cars

Many of Principal's supersavers forgo buying new cars, and instead drive older vehicles.

Cars can be incredibly expensive to own and maintain: The average person spends about $770 per month. Experts say the single best way to reduce those costs is to buy and drive a used car. And savings can be significant — you could save an average of $4,443 buying a three-year-old used model over its new counterpart, according to Edmunds.

2. They live in 'modest' homes

Typically, the single biggest monthly expense a household contends with on a monthly basis is housing, including rent or mortgage payments. Supersavers find ways to cut their housing costs, often, according to the Principal study, by "owning a modest home."

Depending on where you live, owning a home may not be an option: Real estate prices have skyrocketed in recent years. But whether you're buying or renting, you may be able to find a cheaper place to live if you're willing to make some trade-offs. Here are a few other things to try, too, if you're looking to cut housing costs.

3. They travel frugally

Many supersavers opt for cheaper or shorter vacations in order to save more, according to Principal's study.

If you still want to travel, there are ways to cut costs. You can travel to certain destinations during the off-season, for example, or plan well in advance and stick to a budget to keep your spending in line. All told, if you're savvy about it, you can save hundreds, and maybe thousands, while still getting away.

The key part, the hard part, is that they're making hard decisions and sacrifices to balance what's best for their future selves.
Jerry Patterson
Senior VP of retirement at Principal

4. They commit to DIY

Many supersavers are willing to roll up their sleeves, and it pays off. You can do your own yard work, for example, or install your own housing fixtures. Even choosing to pick up your takeout order can save you a couple of bucks on delivery fees.

Or, if you take on a bigger project like painting a small bedroom, you could save up to $455 by doing the work yourself rather than hiring a pro.

5. They clean up after themselves

Supersavers bring their DIY skills to their cleaning habits, too. The Principal study highlights the fact that many of them don't pay for housecleaning services and instead save money by doing the work themselves.

A cleaning service typically charges $130 to clean a house, according to HomeAdvisor, so picking up after yourself instead of outsourcing the job once a week can save you a considerable amount of money. While many people already do their own cleaning, there are always ways to make it more cost-effective. You'll actually save money in the long run by buying stronger, more expensive paper towels, for example, or pricier dish soap.

But buying the right cleaning supplies will only take you so far. If you really want to supercharge your retirement savings, Patterson says you'll want to focus on two things: Stash more money away, and do it now.

The advice is simple, he says: "Save more, and earlier."