Personal finance expert Suze Orman has revealed how ditching your overpriced coffee habit could save you a fortune in retirement. The financial advisor said Gen Z Americans could amass a staggering $1 million in savings for later life simply by foregoing their daily $6 Starbucks. If a 25-year-old puts a small amount away each month in a retirement account, compound interest will cause this to snowball over the course of 40 years, she explained. “All of you are paying $1 million down the drain. I’ve never bought a Starbucks in my life,” said Orman. Foregoing a $6 Starbucks would save $180 a month, and by putting that into a retirement account with a 10% average rate of return, the fund would grow to $14,070.91 over 5 years and to $130,497.61 over 20 years. With the help of compound interest, this pot would balloon to a huge $1,007,209.33 over the course of 40 years. The key is to consider your “guilty pleasure” spending habits and pick one thing you can live without that’s detrimental to your long-term savings. Across all ages, 28% of people have no money at all saved for their later years, while 39% aren’t contributing to a retirement fund. A recent survey showed that 25% of those questioned said they expected to be able to retire with less than $500,000, while 30% estimated they would need a 7-figure pot.
Finance Guru Suze Orman: "Giving Up One Daily Habit Could Make You a Millionaire”
Personal finance expert Suze Orman has revealed how ditching your overpriced coffee habit could save you a fortune in retirement. The financial advisor said Gen Z Americans could amass a staggering $1 million in savings for later life simply by foregoing their daily $6 Starbucks. If a 25-year-old puts a small amount away each month in a retirement account, compound interest will cause this to snowball over the course of 40 years, she explained. “All of you are paying $1 million down the drain. I’ve never bought a Starbucks in my life,” said Orman. Foregoing a $6 Starbucks would save $180 a month, and by putting that into a retirement account with a 10% average rate of return, the fund would grow to $14,070.91 over 5 years and to $130,497.61 over 20 years. With the help of compound interest, this pot would balloon to a huge $1,007,209.33 over the course of 40 years. The key is to consider your “guilty pleasure” spending habits and pick one thing you can live without that’s detrimental to your long-term savings. Across all ages, 28% of people have no money at all saved for their later years, while 39% aren’t contributing to a retirement fund. A recent survey showed that 25% of those questioned said they expected to be able to retire with less than $500,000, while 30% estimated they would need a 7-figure pot.