Coffee Cup Retirement

Can we retire on our latte’s?

Photo: Engin Akyurt. Source: Pixabay

You’ve heard the advice: “Put enough aside when you’re in your 20s, and you can have retire with millions by the time you turn 60. Just give up your daily latte, and you, too, can be a millionaire.”

But let’s do the math. Suppose we give up that daily latte and save $5 per day. If we invest that in the stock market at the long-run return, after inflation return, we’ll end up with about $150,000. We can’t retire on that.

This is why people don’t like trust retirement “experts.” Folks may not run spreadsheet programs to make their calculations, but they’re not stupid. They know that you can’t spin straw into gold, and that you can’t turn a Starbucks latte into a huge nest-egg. Maybe if I had 80 years, then my weekly $25 could grow to over a million. But I don’t have 80 years until I retire. It doesn’t take a worksheet to know that.

Photo: Tumisu. Source: Pixabay

People have daily demands that keep them from saving very much, especially when they’re young. Rent, health care, child care, transportation – these needs trump entertainment and fancy coffee. And today most people need a smart phone and data plan. Ever try getting hired without quick access to email and a phone? It doesn’t work.

Retirement gurus who suggest austerity as the solution for young people should look in the mirror. How austere is their lifestyle? How well would it work for them if they drive a cheap clunker to their radio or TV spot, and it breaks down on the way? Are their bosses very understanding if they show up late? Didn’t think so!

People don’t save enough because they don’t make enough. The best way to get ready for retirement is to learn how to be more productive. And the best way for politicians to improve our retirement system is to stop wasting taxpayer dollars. Anything else is just froth.

Douglas R. Tengdin, CFA

Charter Trust Company

“The Best Trust Company in New England”

By |2018-04-12T06:54:57+00:00April 12th, 2018|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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