While most workers are saving for retirement to some extent, many of them are falling far short of what they need to retire comfortably.
The average worker expects to need around $1.8 million for retirement, according to a 2023 survey from Charles Schwab. Meanwhile, the average retirement account balance among Vanguard 401(k) holders is just $134,128, Vanguard's 2024 How America Saves report found.
There's a small subset of workers, however, who are far more likely to reach their financial goals. Here's what it takes to become a "super saver" and set yourself up for a more comfortable retirement.
Image source: Getty Images.
What is a super saver?
New research from the Transamerica Center for Retirement Studies defines a "super saver" as someone contributing more than 10% of their wages toward their retirement account.
The 2024 report revealed that 44% of workers participating in a 401(k) or other type of retirement account are considered super savers, with 29% of that group contributing more than 15% of their annual income toward retirement.
If you're falling short of that goal, you're not alone; a whopping 56% of workers contribute 10% or less of their income toward their retirement plan, the report found. But if you're able to increase your savings even slightly, it can seriously boost your lifetime earnings.
For example, say you're earning $60,000 per year -- just higher than the median wage among U.S. workers, according to the Bureau of Labor Statistics. Let's also say that right now, you're saving 8% of your wages, or $4,800 per year. If you were to bump your savings rate up to 10% of your income, that would amount to $6,000 per year.
If you're earning a modest 8% average annual return on your investments, here's approximately how your savings would add up over time depending on whether you're contributing $4,800 or $6,000 per year:
| Number of Years | Total Savings: Contributing $4,800 per Year | Total Savings: Contributing $6,000 per Year |
|---|---|---|
| 20 | $220,000 | $275,000 |
| 25 | $351,000 | $439,000 |
| 30 | $544,000 | $680,000 |
| 35 | $827,000 | $1,034,000 |
Data source: Author's calculations via investor.gov.
Depending on your financial situation, saving even 8% of your wages may be unreachable. That's OK. You don't need to be a super saver to prepare for retirement, and even small amounts can go a long way. Even if you can only contribute 1% of your salary, that's far better than nothing.
One important caveat
While saving for retirement is an important goal, other financial milestones may take priority -- even if you can afford to contribute more to your 401(k) or IRA.
For example, if you don't have an emergency fund, it may be wise to focus on that goal before you increase your retirement savings. A strong emergency fund will have at least three to six months' worth of savings, and it can help you avoid pulling money from your retirement account if you face an unexpected expense or lose your job.
It can also be smart to prioritize high-interest debt over retirement. Credit card debt, for example, can be incredibly costly. The average credit card interest rate is 24.84%, according to July 2024 data from Lending Tree. Meanwhile, the average stock market return is 10% per year, historically. Even if you boost your retirement savings, it may not do you much good if you're continuing to rack up even more in credit card interest.
Saving for retirement isn't easy, but every little bit counts. If you can contribute at least 10% of your wages to become a super saver, it can dramatically boost your total savings. But no matter how much you can afford to save, contributing anything at all is better than nothing.
