# You Can Retire Well On Just \$10 A Day

Posted on June 6, 2014 at 1:01 PM PDT by

Do you feel it when you spend \$10? Maybe a quick lunch on the run or sodas and snacks at the drugstore. What if that was all it took to retire on time and even to retire well?

Let’s the run the math here. You will probably work your whole life, starting sometime between high school and college age. So, we’ll start off at 20.

You need only worry about saving that \$10 on the weekdays, and there’s 260 of them in a year. So we’re talking about \$2,600 a year.

But, you say, that’s almost nothing! Yes, but it’s not zero and you can expect at least some help from your future employer. Let’s say you make about \$43,500 a year and your employer matches the first 6% of your savings up to 100%.

As it happens, your employer is going to essentially double your money, adding in another \$2,610. Now you are saving \$5,210.

But wait, as they say on the TV infomercials, there’s more! Assume that your tax burden is going to decline as well. You might not pay a lot of federal taxes on an income under \$50,000, particularly if you have kids. But every dollar you set aside in a workplace plan is tax-deferred, and the remaining income is taxed at lower rates.

Figuring a tax example that works for anybody is close to impossible, so let’s assume for the moment that the lower tax bill simply means it’s not quite so hard to part with the \$10 a day. In a typical biweekly check, we’re talking about \$200 that won’t be in your pay packet, but you’ll hardly miss it.

What you will notice in time is that your 401(k) balance is edging higher and higher each year. In just five years, your \$10 contribution to your future self is worth \$39,000 at a market rate of return.

At 10 years, your savings plan has \$87,000. Just five years later it would be at \$156,000. Suddenly, it’s starting to feel like real money!

And you let it roll, never really adjusting your \$10-a-day plan. Year 20 passes, year 25, then 30 and 40. Even if you never got a raise (unlikely) and never raised your savings rate (inadvisable), you would still reach the end of 40 years with \$1.3 million. Now you are 60, still plenty young.

## Rolling over

Presuming you paid into Social Security all this time, you can expect a monthly check at retirement from the government plan that, with your savings, will easily generate comfortably more than you earned working all those decades — enough to maintain your lifestyle and even roll over the extra to invest for future spending in your advanced years.

And it all started with \$10, carefully and prudently invested instead of spent and forgotten.