If I spend roughly $3 per day on coffee over a 50 year period, I am implicitly valuing coffee drinking by at least $500,000. I probably get even more satisfaction than that. And that is just on coffee. Imagine the value I get from living in a safe, comfortable home, or driving my car.
Why do I say this? Because even for people of extremely modest income, accumulating a large retirement nest egg through small amounts of savings is not a mere possibility, but almost a certainty. Remember that the next time someone tells you that only the government can provide for retirement security. Even someone earning the minumum wage for a full-time job earns $14,300 per year. Saving less than 10% of that each year could generate hundreds of thousands of dollars in savings over the course of a lifetime.
In tomorrow’s article I will explain how to think about this more carefully.