The Latte Effect - A Retirement Tool

Have you heard of the “latte effect”? The “latte effect” can have a BIG impact to your retirement portfolio. 

The idea is to invest the money in your retirement account that you would otherwise be spending monthly on non essential items or services (ie. latte’s). In today’s world of Starbucks and Groupon coupons, it is often easier said than done.

We have found a great website called which offers an interactive calculator to show you your long term savings if you reduce non essential spending! It is great for interactive or visual learners.  You choose your rate of return, you choose the years you have left to retirement, and you choose the area in which you can cut back (gym, coffee, lunches, entertainment, lottery tickets, etc).

How can you benefit from this? 

1. Use it as a budgeting tool.  Look at where you can cut back and get the BEST savings from.

2. The other is to set a savings goal. Example: Let’s say you know you need another $50,000 to $100,000 in your retirement portfolio over the next 10 years. Set this as your goal and see what you can cut back on monthly to help you achieve this savings goal. ** This is great for anyone who has a shortfall when it comes to retirement funding or planning.

3. If you are NOT worried about retirement, but you are worried that your children have developed strong spending habits because they want to “live for today”… send your children this website and encourage them to spend some time on it.  

*The actual dollars at retirement will be larger due to inflation (the lattes and gym memberships will only increase).

Source: via Kat on Pinterest
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