Focused Retirement Savers Are Not Dispirited by Inflation

According to Principal’s 2022 Super Saver Survey, which surveyed retirement plan participants who save 90% or more of the maximum IRS contribution or defer 15% or more of their salary into retirement accounts, inflation and market volatility haven’t rattled these savers’ savings habits.

The research shows that 54% of respondents have been saving more over the past 24 months, while 59% plan to save more than $20,000 for retirement this year and 82% said they’re financially prepared to endure a recession.

“Staying the course is the super saver motto,” the survey report states. “Only one-third made changes to their retirement accounts this past year because of market volatility—mostly adjusting their investments to align with their risk tolerance.”

The study found that among this diligent cohort, Generation Z savers tend to make slightly different lifestyle adjustments to save additional amounts. Among all super savers, many are content with the basics, such as driving an older car, travelling less, buying a modest home and taking on do-it-yourself projects and household chores themselves. Gen Z savers have some of the same tendencies—traveling infrequently and driving older vehicles to save more, for example—but they are more likely than other generations to rent rather than buy a home, choose secondhand goods and live with their parents longer, according to Principal.

Among Gen Z respondents, 18% are homeowners, while 68% said home prices are too high for them to buy and 19% live with their parents, according to Principal. In contrast, the majority of Generation X and Millennial respondents own their homes. 

The survey also asked super savers what they will ‘splurge’ on; 57% said streaming services, 46% said travel, 33% said dining out and 31% said entertainment.

Their top financial concern, meanwhile, is the cost of health care, at 35%, followed by inflation at 33% and fear of a recession affecting the economy at 22%.  

Across the three generations studied by Principal—Gen X, Millennials and Gen Z—super savers have in common robust retirement accounts, yet their profiles differ when it comes to financial priorities for the next two to three years.

Gen X savers’ financial priority is to increase retirement plan contributions, while Millennials’ goal is to save more in an IRA and Gen Z savers plan to save for a big purchase like a house, car or vacation.

Their financial plans for this year also differ: Gen X savers want to save more money for retirement, Millennials want to take vacation and Gen Z savers want to reduce spending.

Principal also found that 73% of respondents said the current market is a buying opportunity and that 40% of Gen Z super savers have invested in digital assets such as cryptocurrencies or non-fungible tokens.

The study was conducted online by Principal from June 24 to July 5, with 1,120 retirement plan participants. The respondents were U.S. residents and participants in a retirement plan at Principal between ages 18 and 57.