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A Simple Way to Add $250,000+ to Your Nest Egg


You’ve probably heard Suze Orman rail against buying all those “little things” on her TV show or author David Bach speak about the ill effects of the “latte factor” on your bottom line.  But how much does spending a couple of bucks here and there on small-ticket items really impact your overall retirement savings?

Encore asked Steve Orr, president of the Orr Financial Group in Victoria, Texas, to do the math for us.  To figure out how much these “little things”  are costing us, Orr assumed that we buy these items five days per week for 40 weeks a year (or 200 out of 365 days per year), and we do  this over a 35-year career.

  • Latte ($3.95 each) = $27,650
  • Energy drink ($3.99 each) = $27,930
  • Muffin ($3 each) = $21,000
  • Lunch ($8 each) = $56,000
  • TOTAL: $132,580

(Note:  These numbers don’t factor in price inflation, meaning these impulse buys will likely cost you significantly more.)

Now, what if, rather than spend the money on these items, you actually put it into a 401(k) or Roth IRA each year for the next 35 years.  Assuming a mere 3% annual rate of return, you’d end up with an extra $246,560 in your account after 35 years, Orr says.  If you assume an 11.5% annual rate of return, which is roughly what the S&P 500 yielded from 1970 to the present, you’d end up with more than $1.7 million in your retirement account, he adds. (Try our compound interest calculator for your own amounts.)

Bottom line: You could throw away roughly $132,000 over the course of 35 years on these unneccessary buys, or you could invest that money, and end up with anywhere between $250,000 and $1.7 million over that same period, he says.  “These little impulse buys really add up,” Orr says, especially considering that when you invest the money you could easily become a millionaire.

To help you cut down on this kind of spending, Orr recommends writing down everything you buy and what it costs for a month.  “Most people are amazed at how much it all adds up,” he says.  And the act of writing it all down helps to make us mindful of just how much we’re really spending each day, he adds.


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    • The simplest way to add $250.000 to your nest egg, go rob a bank.If you get caught, the state will take care of your retirement years. it’s a win win situation.

    • It’s ok to buy these things on in a while. But the person who buys 5 cups of coffee a day because they are addicted, these are the people who need help. I’ve never drank a cup of coffee in my life, the stuff sucks.

    • Think insulated, reusable lunch bag along with frozen water as refrigerant … Day hikers know well the miracle of insulated lunch bags, frozen water, etc.. as a means of delivering “refrigerated” lunches after hours of hiking along trails in less than “cool” refrigerated, air conditioned environments ….

      Within these many “I can’t, won’t, not possible …” postings there is a consistent pattern of lame excuses for not wanting to do what is necessary to save money, have viable financial options out and beyond personal financial limitations.

      As with all life and living challenges, all and everything is a matter of priorities, choices and having personal control over those choices. If one allows financial limitations, living beyond one’s means, and optional costly personal imperatives to define one’s personal life, so be it. However, with that choice, one will be forever plagued by angst and stress. No faulting, blaming, and accountability beyond oneself.

    • Good article but I still have to actually eat! And bringing lunch to work is hard for me since I travel in a car that sometimes doesnt have air conditioning. So Im logically almost forced to eat out.

    • Just my opinion – I save a lot of money living a frugal life. Agreed. So what am i earning for when I cannot spend it when I should be able to? I grow old and discover that all my middle life I was busy in saving so that I could be happy when I am old, which I personally would certainly not. Point is that everything should be in moderation.

About Encore

  • Encore examines the changing nature of retirement, from new rules and guidelines for financial security to the shifting identities and priorities of today’s retirees. The blog also explores news that affects retirement, from the Wall Street Journal Digital Network and around the web. Lead bloggers are reporter Catey Hill and senior editor Jeremy Olshan. Other contributors include The Wall Street Journal’s retirement columnists Glenn Ruffenach and Anne Tergesen; the Director for the Center for Retirement Research at Boston College, Alicia Munnell; and the Director of Research for Pinnacle Advisory Group, Michael Kitces, CFP.