Want To Boost Your Retirement Savings By Nearly 50%? New Research Finds This Trait Is Key

How motivated are you to pursue your financial goals? Are you willing to make small sacrifices, like foregoing Uber eats, to help fund your long-term goal of saving for retirement?

New research from Goldman Sachs suggests that possessing a lot of “financial grit”—or perseverance and optimism when setting out to achieve long-term financial goals—results in having, on average, 49% more in retirement savings when controlling for income.

What Exactly Is Financial Grit?

The researchers measured financial grit by asking respondents how they dealt with financial hardship. Those who had a growth mindset when dealing with setbacks and a greater ability to resist short-term temptations so they can focus on long-term savings goals had higher financial grit.

Moreover, all hope isn’t lost for those who don’t think they have it. The researchers note that it’s also possible to develop financial grit.

“There’s something in the behavioral finance world called ‘the power of positivity,’ which really shows that people who sort of embrace the notion that what’s in front of them is achievable—whether it’s retirement savings or other aspects—the reality of them achieving it is much higher,” said Chris Ceder, a senior retirement strategist at Goldman Sachs Asset Management, in a recent webinar. “It’s not a fixed state.”

How Can You Develop Financial Grit?

Building financial grit can involve changing your mindset about money. This could mean having faith that you will save enough money for retirement. It can also mean not abandoning your other goals when you are tempted to splurge.

And to reduce the impact that setbacks like an unexpected medical bill or home repair have on your finances, try sticking to some time-tested personal finance rules like having an emergency fund.

While experts generally recommend having three to six months’ worth of expenses in an emergency fund, even having a smaller amount saved can help. In fact, just $2,000 in an emergency fund can improve financial well-being and reduce financial stress, according to fund provider and brokerage Vanguard.

“Emergency savings . . . [are] especially important because many families experience some sort of financial emergency about once a year. Having that buffer available lets them prepare for the unexpected and avoid the worry and financial stress that can come from not having this buffer,” said Malena de la Fuente, a behavioral scientist/economist at Vanguard.