Americans' cost-of-living anxiety is creating a population of oversavers

• A lot of Americans are saving way more than they need to.
• That's largely due to anxiety about higher costs of living, especially in retirement, experts told BI.

Being thrifty is a full-time job, one self-professed frugal spender told Business Insider. A 32-year-old based in Michigan, she's nailed down the science of cost-cutting, whittling her necessary expenditures to just $2,000 a month—around a third of her take-home pay.

Despite making six figures, she pours much of her free time into frugal pursuits, like shopping secondhand and spending 30 hours a week making virtually all her food from scratch, including bread, pasta, and canned goods.

At this point, it's more of a way of life, she said, requesting that she remain anonymous due to the public nature of her work. She said she's not planning on giving up her frugal habits anytime soon, despite the added inconvenience.

"I've definitely felt burned out by it at times," she said. "I think if either my fiancé or I were to lose our jobs, I think it would be much more stressful."

Her anxiety about being financially insecure — despite being relatively well off — is becoming more common.

While Americans are notorious for undersaving and overspending, there's a small but growing cohort of oversavers—a group that socks away a lot more than the recommended 15%-20% of their gross income a year, despite having solid finances overall.

That's largely driven by a more acute awareness of a higher cost of living, financial experts told BI, with Americans still scarred by the sharp rise in prices several years ago when inflation was raging around 9%.

There are signs that the ranks of the oversavers in America are growing. A 2024 Bank of America study on wealthy Americans found that 55% of people ages 21-43 increased their cash holdings over the last two years, despite having at least $3 million in investable assets. On average, the group had around 18% of their portfolios allocated in cash, much more than the 2%-10% recommended by financial professionals.

Membership on the subreddit r/FIRE—a forum used by high-earning, high-saving individuals looking to amass enough wealth to retire early — has seen a 265% rise in the past three years, according to the analytics site Subreddit Stats.

The subreddit r/HENRYFinance—also populated by high-earners who swap wealth-building tips—has seen an even bigger explosion in that timeframe, with membership up over 9,000%.

The wealthy are increasingly trying to cut costs. The discount chain Dollar Tree saw 3.4 million new customers from households earning over $125,000 last year, the firm said in its first-quarter earnings call.

High-income Americans are also more likely than other consumers to use coupons and shop secondhand. According to one study, 89% of households earning between $175,000 and $199,999 said they redeem coupon codes, more than any other income group, and 9 out of 10 Americans making over $175,000 have purchased a resale item, 14 percentage points higher than the average, another poll found.

Kitty Ritchie, a financial advisor at Drucker Wealth Management, says she's seeing more clients who appear terrified to spend their savings, even as they age into retirement with ample cash set aside for emergencies.

"I think there are more people worried about spending the money. It's the ones that have accumulated it, they don't want to lose [it]," she said.

Cost-of-living stress

The pace of inflation has cooled significantly, but many Americans—even wealthy ones—are still dismayed that many costs are still higher overall.

"Even though people with six-figure incomes have a sizable amount of money coming in on paper, cost of living pressures are cutting into that pretty quickly," Ted Rossman, a senior industry analyst at Bankrate, said.

High-income Americans may also be sensing less job security in the white-collar sector, he noted. Companies have announced 664,839 job cuts through the first 10 months of the year—the highest year-to-date total recorded since 2020, according to Challenger, Gray & Christmas.

Those uncertainties amplify fears of not retiring on time, or at all, the 32-year-old saver from Michigan told BI. She pointed to her father, who depleted his retirement savings early after having to pay for cancer treatment out of pocket.

"I think no matter how stable it seems, it feels like there's a very real risk that you could have to work for the rest of your life, and I certainly don't want to do that," she said.

Financial anxiety is higher than it was several years ago. According to a survey from Discover, 80% of Americans said they felt anxious about their finances to some degree, up from 71% in 2021.

Experts, though, say oversaving could hurt Americans trying to build wealth in the long run. Extreme savers could be losing out on big investment gains over the course of years by piling up cash.

They also risk lowering their quality of life, especially if saving means postponing necessary health or home expenses, Ritchie noted.

"It's the 78-year-old who's saved, worked hard, and done well, but he's not going to spend the money now. And that's the conversation of, 'you can't take it with you'," she said.