It will cost $300,000 for two people to eat $5 meals in retirement if you retire today. How does that make you feel?

by Nick on May 22, 2014

It will cost $300,000 for two people toI was looking over some old 401(k) plan materials while cleaning out the office and got depressed. Then motivated. Then relieved. Then hungry.

It wasn’t the my balance that took me on the emotional roller coaster. I’m OK there and have plenty of time to pile on. But the marketing materials and scare tactics used to “encourage” people to participate got me thinking.

Here’s the short version:

Retirement is expensive enough. With inflation, the costs can be stunning. Just eating in retirement can cost two people over $200,000 — $5 a meal, 3 meals a day, over 20 years. Adding a modest 3% annual inflation rate, the cost swells to nearly $300,000.

$5 meal x 2 people x 3 meals a day x 365 days a year x 20 years $219,000 + 3% inflation = $294,000

How you live in retirement may be determined by what you can afford when the time comes. In fact, more and more Americans are finding that they need to work at least part-time because they didn’t save enough for retirement. By preparing today, you may have more choices for your life tomorrow.

Um… $300,000 to eat five-dollar footlongs three times a day when I retire?!?!

W. T. F.

I mean, don’t get me wrong, I’m a big “five dollar footlong” fan. But even today I’m probably averaging more than $5 per meal. Then again, I do eat dinner at home every night. And breakfast is usually a protein shake or some egg whites, so maybe I average under it. Lunch gets a bit pricey sometimes. I digress.

And granted, this is over 20 years, so it’s really only $15,000 per year for two people, although that figure assumes you retire now. At only 35 years old it’s safe to assume that number will be higher once I hit retirement age, likely at least double. Maybe triple if I want to eat some fancy foods from time to time.

But that’s OK. My investments will be yielding a return in retirement, too. And taking a 9% average return (roughly the market’s historical return) means that if it’s even $30,000 per year, I’d only need $300,000 in my retirement accounts for my returns to cover my Shake n’ Bake.

That’s the beauty of investing over the long term for retirement. Your money is not just a pile under your mattress. It grows. And you can spend that growth during retirement and still keep your money.

But boy did that $300,000 number jump out at me at first. What about you? Have you seen any fun (or not so fun) scare tactics with your retirement plans?

What’s on your retirement menu? And what are you doing to save up for it now?!?!

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{ 2 comments… read them below or add one }

save. spend. splurge. May 22, 2014 at 9:47 am

I have not seen any scare tactics with my retirement plans as I am a freelancer but I scare myself anyway.

$300,000 is not enough to retire on then!! Unless you plan on cooking everything. But they said $5 per meal right? So $15 a day is what they’re saying. This means that if I had $300,000 saved, I could eat $30/day if I was just paying for myself.

That’s not so bad. I have $230,000 saved and I am about 35 years away from a conventional retirement (Age 65). I figure in 35 years I will have enough time to save more money to be able to live and travel, too!

Will link to this in a future roundup.

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Nick May 26, 2014 at 9:38 am

Thanks, SSS! I totally agree. I’m aiming quite higher, but break my savings into “retirement” and “early retirement” because no way this guy’s waiting until he’s 59.5…. then again, no way I’m stopping working at 59.5. I enjoy making an impact way too much to ever stop being productive. 🙂

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