Who Maxes Out Their 401k, And Where Do They Make Sacrifices?

piggybank_plainThe Principal Financial Group surveyed “younger” retirement plan participants ages 23-51 who contributed at least 90% of the annual 401(k) maximum limit. That means they put away at least $16,200 each (limit was $18,000 for 2016/2017). These “young super savers” made savings a high priority, so they were asked about the areas in which they made sacrifices. Here are some of the top answers:

  • Cars. 47% of “super savers” drive older vehicles in order to help maximize retirement savings.
  • Housing. 45% of “super savers” choose to live in modest homes to boost savings. 18% of millennial supersavers are renting.
  • Vacations. 42% are opting to travel less than they would prefer.
  • Work. 40% say they put up with work-related stress. 27% put in extra hours instead of spending time with friends and family.

In a separate survey, Vanguard found that overall 10% of plan participants contributed the full maximum to their 401ks. (Note that “plan participants” means people offered a Vanguard 401k option that then also chose to participate.) Here’s how these 401k “super savers” broke down by income and age:


If you make a modest income and max out your 401(k), you are definitely doing something differently. Roughly 95% of people who make less than $100k aren’t maxing out their 401(k).


  1. Wow!!! This makes me understand just how many people don’t take their finances seriously or aren’t able to save as much as they should because of circumstances.

    Thanks for posting these!

  2. The first two years of my working career (making 50k) in 2004-2006 I maxed out my 401k (also 6% match). No Roth option was offered by my employer at that time. They offered a 6% match. Fees were really low, Investment options were plentiful. 37k in 3% student loans (BS+MBA), living at home, and got a 20k car loan (2%) 6 months in. Paid car off in less than 18 months.

    Fast forward to now, Married a year ago, 2 kids, we both put in enough to get our employer match. Fees are higher, investment options poorer. We invest surplus in our IRAs (Betterment), but have prioritized 1 car loan (2%), and paying down our mortgage to eliminate PMI ($50 a month) on our house we recently bought. That old 401k is now an IRA at a brokerage with a mix of hand picked stocks.

    Sacrifice early for a few years, then you can enjoy your life if you wish, or save more and retire early. Buy quality over quantity. Spend less than you make. Pay insurance annually, and budget for it monthly.

  3. Interesting how PFG framed the question about savings around the word “sacrifice”.

    I max out everything to the very max, and do not think I sacrifice anything to get there.

    I believe that the ultimate sacrifice is spending everything today, and working because you have to in old age.

    • Exactly. I started my career at 45k, paid down all my debts in a couple years, and then maxed out my 401k because I was like “Well, what do I do with this money?” Never felt like I was sacrificing, I just based my leisure around the money I had left.

      NOW, it’s a lot harder because I have all the obvious stuff maxed and often wait too long to invest excess cash. It’s not so clear the best place to put money when it’s not tax sheltered and you’re already hugely exposed to the stock market. I miss those days when I felt like I was doing everything I could with the money I had.

  4. I find it interesting that only 18% of the millennials surveyed choose to rent. I would have expected it to be higher. The statistics about spending more time at work and less time with family and vacation is troublesome. I don’t think it is worth sacrificing your livelihood. Thanks for posting this. This is useful.

    (Not very important, but I’m confused by the percentages in the Vanguard survey. Neither the income nor age breakdown add up to 100%, and they don’t match. I must be overlooking something…)

  5. I hope more young people realize the cost – both financial and environmental – of air travel. Traveling is great and it opens your mind and lets you see how special this planet is, but when you travel frequently by plane, you are also creating such significant carbon emissions that it jeopardizes the future of our planet. You can be an environmental saint in every other area of your life, but if you fly frequently, you have one of the worst carbon footprints on the planet.

    • Do you have any numbers to back it up? I thought cars created the worst carbon footprint with 3.22 trillion miles driven in 2016 just in the USA.

      • Sure – so cars are worse in aggregate, but per mile traveled, airplanes are far worse. So if you deciding between flying from Boston to Baltimore or driving, driving is the better environmental choice.



        The source FiveThirty Eight uses calculates that “a roundtrip flight from, say, Denver to New York produces the equivalent of nearly a year’s worth of emissions from a car, and more than the annual emissions of an average person living in India.”

        Now imagine you are flying more than once per year. I see so many frequent flyers talk about how they love seeing the planet, but don’t really reconcile their love of their planet with what their carbon emissions from all that flying is doing to the planet.

        • The 538 piece is interesting. I may be wrong about this, but my reading is their emissions estimates are for the entire flight. Wouldn’t the proper comparison be between the flight’s emissions and the emissions of 137 people driving their cars from point A to point B (a 737 has 137 seats)?

          • I can think of one thing worse than 137 people on a cross country flight. 136 people on a cross country flight and 1 person driving cross country.

          • I believe the emissions are per passenger, not for the entire flight.

            In their calculator description document, they talk about “fuel consumption per passenger”:

            The aircraft type, the number of seats on board, their seat
            occupancy rate and the transported cargo have a direct impact on the fuel
            consumption per passenger. The most important factors among these are
            seating and seat occupancy rate. The Emissions Calculator takes these factors
            into account by using the average figures for German airlines and aircraft
            manufacturers’ standard configurations with regard to seating.


            The calculator for US airlines may be different. They also note that burning fuel high in the atmosphere presents problems that burning it on the ground with car travel does not. (I think we should also reduce car travel, but most if you’re an individual who flies and drives, reducing flights seems more urgent environmentally)

        • James N says:

          Fair enough to take into consideration such things if they are important to you.
          Of course, according to patron-saint-of-anti-Climate-Change Al Gore, you could always buy some “carbon offsets” and then you’re good.

          In all seriousness though, I do think it’s most reasonable to look at the whole picture. If someone enjoys flying, and is willing to make other sacrifices (perhaps they bike to work), I’d be inclined to not judge them just because they don’t find their savings in the same ways I may be focused on.

          Heck, if environmentalists made a collective push for really ramping up modern nuclear power plants/technologies, that would probably vastly more than make up for the most excessive use of aircraft imaginable.

          • 1) “if they are important to you” – that’s kind of my point. If you enjoy traveling to see different parts of the planet, don’t you kind of think the planet is important?

            2) I think carbon offsets is, theoretically, the best way for people who want to travel by air without doing as much damage to the environment, and by extension, have less guilt. How effective carbon offsets are, how regulated or vetted the claims of different offset providers is, is another matter, and one I’d be interested in learning more about. Even if you don’t fly by plane, but you care about sustainability and not harming the environment, shouldn’t we all want to buy carbon offsets (presuming they worked)?

            3) As for the air flyer who bikes – well, I don’t think any of this is about judging anyone. It’s about what people who care about the planet can do to make sure the planet is healthy and we live sustainably. And I think lots of people are not aware of how big a carbon footprint air travel is. We have a lot of cosmopolitan, well-educated coastal elites who say they are environmentalists, but because they are cosmopolitan – they tend to travel around the world more frequently. And paradoxically, it’s many rural red-staters who have never traveled by plane, who may not care at all about climate change or the enviroment, who have a much smaller carbon footprint.

            4) We could make lots of changes that would exceed the world’s footprint of airtravel – everyone going vegan, renewable energy investments, etc. – I was just raising something more on an individual level that many of us might encounter and be able to control more than national legislation.

  6. I have no confidence in social security being their for me when I retire. But I want to be able to retire. As a result, saving as much as possible is essential.

  7. I always felt most people don’t understand 401ks or don’t trust the market. My own experience, I recall my employer simply giving me access to a 401k, but couldn’t explain how to invest. In later years, the company operating our plan, started visiting our company a couple of times of year to demystify the process. By then, I was already following your blog– from the beginning I might add, and also reading everything about retirement that I could, which opened my eyes and allowed me to make adjustments. Now there’s all sorts of tools that you can use that are also helpful. My plan now has an automatic investment option based on risk where it’ll invest for you.

    What I find intriguing about a 401k is that most people don’t realize they can contribute post tax contributions. Some don’t realize they can also have other retirement investments. Also, borrowing against your 401k seems to be highly popular where I work, I think over 50% of our company employees have a loan of some sort, and I don’t think people realize the impact that has on your retirement.

    I have talked to some of my co-workers, and I think through some transparency and education, we’ve become better at planning for retirement. It amazes me more people don’t take the time to research or learn more. Often I hear that some think they’re too young to start planning. I only wish I started earlier

    • I don’t see any issue with borrowing from your retirement fund (assuming low fees and that you’re using it constructively). I’d rather pay myself back the interest then to a bank (and usually the interest is lower too), and that money taken out reduces risk to the market. If you’ve used it to buy a house and forgoe rent there’s a good chance your returns are actually higher then the market when you take into account home equity.

    • You say “I think over 50% of our company employees have a loan of some sort, and I don’t think people realize the impact that has on your retirement.” Those people might be smarter than you think. If you have a 5% mortgage you can borrow from your 401K and pay down that mortgage. Where else would you get a guaranteed 5% return, say, over the next 5 to 10 years? We most likely will see a recession within the next 5 years, this will be the longest expansion in history, but it will end at some point, the only question is when. So, that means the market will be down 30 to 50 percent. That’s why right now is not the best time to put money in your 401K with the market at all time high and the most it has ever been by many metrics. A few days ago Jonathan posted a good article about the cost of S&P500 in terms of hours worked. Conclusion is this is a good time to cash out those S&P500 shares at all time high and borrow the money from 401K to pay down your mortgage for a guaranteed 5% a year or whatever your interest rate may be.

      • Are you assuming that the loan from your 401k is interest free? As far as I know, it would be around 7-8%, which would make it a bad idea to pay off a 5% mortgage.

      • I’ve taken out a 401k loan myself a long time ago to consolidate debt, but you have to consider the overall cost. A loan, even though it’s paid back at a certain rate of interest, will likely reduce your overall retirement. There’s technically no guaranteed return… it could lose value. Although it may not. This is money that could have been compounding and earning a return for a longer period of time. I know many people that have two loans against their 401k, pay them off, and then continue to take out loans again. It *seems* ideal at least for short term debt, but the long term impact could be huge. Even though you’re paying yourself back, letting the money sit untouched has it’s merits.

        I think in some situations a loan against a 401k makes sense, however I think many people take a 401k loan without giving it full consideration and possibly even running numbers. Heck, a lot of people drain their 401k before they’re of age and take the penalty. There’s always a rationale for it. For me, in my own situation, when I took a loan some year ago, I didn’t realize it would make it harder for me to be where I wanted at certain milestones. I’ve since corrected, but the closer you are to retirement, the harder it is to correct. I just wish I knew more about 401ks when I started this process. Knowing makes a huge difference.

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