Please ensure Javascript is enabled for purposes of website accessibility

These Are the Secrets of Super Savers

By Daniel B. Kline – Updated Apr 16, 2019 at 10:06AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Yes, they set aside much higher percentages of their incomes than the average, but that's only one piece of the story.

Most Americans have trouble saving money. The overall personal savings rate came in at 7% of income in 2018, according to Federal Reserve data, and 40% of Americans say they wouldn't have the cash on hand to deal with an unexpected expense of just $400.

"Most," however, is by no means "all": TD Ameritrade recently conducted a study that dug into the behaviors and habits of a demographic the researchers dubbed "super savers" -- Americans who save more than 20% of their annual income. Perhaps unsurprisingly, members of this group approach financial matters somewhat differently than the rest of us.

"The biggest difference between super savers and others is simply the amount they save -- on average, 29% of their income, compared to non-super savers, who save 6%," said Dara Luber, senior manager of retirement at TD Ameritrade in a press release. "Three in four super savers are financially independent, or on the path to be, compared to less than half of non-super savers, with more of them heading toward early retirement."

A person drops change itno a piggy bank.

Saving money requires sacrifices. Image source: Getty Images.

What do super savers do?

More than half (54%) of super savers start investing by the age of 30, with 30% starting by age 25. That compares to 39% by 30 and 20% at 25 among the other respondents.

In fact, only 4% of them said they don't invest at all, compared 23% of non-super savers. And 57% of super savers plan to retire earlier than their parents did (or they've already done so), compared to 46% of non-super savers.

But it's not just saving more that sets them apart. They are also spending less than the average American in nearly every category. The biggest differences are in housing (14% of income versus 23%) and household expenses (16% of income versus 21%).

The vast majority of super savers surveyed (88%) said that it's worth making sacrifices now to achieve financial independence sooner. There were four key metrics uncovered by the survey that showed significant differences between super savers and the rest of us.

  • 65% avoid high-interest debt, compared to 56% of others;
  • 60% stick to a budget, compared to 49% of others;
  • 58% invest in the stock market, compared to 34% of others;
  • 55% max out their retirement savings contributions, compared to 30% of others.

"The good news is that the tools and practices these super savers are employing to pursue their financial goals are available to all Americans," said Luber. "Low- and no-fee ETFs, brokerage accounts with low or no trading fees, retirement accounts, and other investment vehicles are widely available, and it's never too late to set up a budget or start investing."

Check out the latest earnings call transcripts for the companies we cover.

What can you do?

Saving and spending are naturally intertwined. To increase your savings, you must either spend less or make more. Ideally, you will target a percentage of income to set aside and invest, and keep saving at that rate as your income grows.

It's a strategy that requires sacrifice. Buying a smaller house, renting a less desirable apartment, or keeping your car for many years after you pay it off are the kind of decisions that can lead you to financial independence sooner.

Finally, it's important to set some clear financial goals. Any time you want to stay consistent about foregoing certain types of immediate gratification, it's good to be able to focus on your longer-term reasons. With those in mind, you have a much better shot at staying prudent now, and setting yourself up for a comfortable future.

Daniel B. Kline has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

TD Ameritrade Stock Quote
TD Ameritrade

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/07/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.