Trade Your (Insert Indulgence Here) for a Better Retirement
At this point, you're probably tired of the constant diatribes against your daily latte. It seems like every personal investing article out there outlines how much the average American spends on coffee each day, month, and year, and how much that money could become in 30 years if invested in low-cost index funds instead (a good choice for the beginning investor). This isn't going to be yet another condemnation of one particular guilty pleasure. Rather, it's a discussion of all your guilty pleasures, and how just a little sacrifice and delayed gratification now can help you invest more money to live the life you want sooner.
It's no secret that Americans in general are ill-prepared for retirement. As recently as January 2020, a TD Ameritrade study found that 59% of individuals aged 40-49 have less than 100k saved for retirement. 53% of those aged 50-59 have less than 100k. Considering the average American worker also believes they'll need at least $1 million in assets to retire comfortably, it's clear there's some ground to make up.
If you start saving at 25 and have the target of hitting $1 million by the age of 65, you need to save about $4,620 a year and realize an average annual return of 7%. If you want to have more than $1 million, you either need to save more or get a higher return. As you age, the amount you have to save annually to hit that goal rises significantly. Here's how much four different ages need to save to have $1 million in the bank at 65, assuming a 7% annual return.
Source Fool.com
