Personal Finance

These ‘super savers’ are retiring earlier than most. Here’s what they’re doing differently

By March 25, 2019 No Comments

You’ve probably heard of the FIRE — financial independence, retire early — movement, the trend that’s taken hold among individuals who are mostly in their 20s and 30s.

In order to achieve those goals, they are avoiding high-interest debt and sticking to a budget.

And there are a few things they are doing differently.

Super savers are making investments a priority even over their housing and daily costs.

These over achievers are putting away 29 percent of their income compared to others, who are investing just 6 percent of their money, on average.

“They’re not downsizing their lifestyle. They’re not looking to move to cheaper states, necessarily,” Luber said. “They’re just spending smarter and saving smarter.”

More than half of super savers — 54 percent — started investing by age 30. Almost a third of them — 30 percent — started by age 25.

In comparison, 39 percent of non-super savers started by age 30, and just 20 percent of them by 25.

“Saving becomes ingrained in everything they do, and it’s a priority for them,” Luber said.

More from Fixed Income Strategies:
The top 10 cities where you should spend retirement
Medicare won’t cover this key expense
Cut these unnecessary expenses and save thousands a year

While super savers are active investors, they also prioritize low- and no-fee investments.

These individuals are more likely to own low-cost exchange traded funds, at 47 percent, versus just 31 percent of non-savers.

Super savers are also more likely to invest in low- or no-fee brokerage accounts.

When it comes to retirement accounts — 401(k) plans, individual retirement accounts, annuities and health savings accounts — super savers are more likely to own them all.

The one account that most distinguishes them from other individuals is post-tax Roth IRAs. About 53 percent of savings overachievers have Roth IRA accounts, versus 29 percent of other savers.

“They’re looking at their future and saying, ‘If I pay taxes today, I could potentially have more tomorrow,'” Luber said.

Read More…