For Mark Roberts’ Use: One of the most common reasons people give for not saving for retirement is, “I don’t have anything extra to save”. While this may be an unfortunate reality for some people, most of us really can manage to save for retirement, even if it’s only a small amount at first.

Almost everyone has some habit or indulgence on which they spend extra money. For example, we probably all know someone at work who has an expensive coffee habit. Assuming this person makes a coffee run twice a day on work days for a latte, espresso, or other specialty drink, we could calculate that they spend around seven dollars per day on these treats. That comes to about 152 dollars per month.

Now let’s assume that same friend kicks their caffeine habit, starts chugging water, and decides to put that 152 dollars per month into an investment account. If the account earned an average interest rate of 7 percent, our formerly-addicted friend would have about 120,000 dollars in the bank after 25 years*.

Obviously, it’s important to enjoy life, and sometimes our enjoyment comes from small indulgences such as a gourmet coffee. No one is suggesting a life of self-deprivation, postponing all enjoyment until the retirement years. What this example serves to illustrate is the fact that most of us do have some disposable income, and what we do with it truly does impact our futures.

Most likely, giving up coffee (or chocolate, wine, or baseball cards) forever is not an appealing option. However, evaluating your daily budget carefully, analyzing what really matters to you, and making informed decisions probably is something most of us could do. A good compromise might be to cut down on frivolous indulgences by half, and invest the other half of that money in a retirement fund. This way, you’ll still enjoy life while you’re young, while also making an effort to prepare for your future.


*This scenario is an illustrative example only, and does not necessarily reflect actual results.