At this point, you're probably tired of the constant diatribes against your daily latte. It seems like every personal investing article out there outlines how much the average American spends on coffee each day, month, and year, and how much that money could become in 30 years if invested in low-cost index funds instead (a good choice for the beginning investor). This isn't going to be yet another condemnation of one particular guilty pleasure. Rather, it's a discussion of all your guilty pleasures, and how just a little sacrifice and delayed gratification now can help you invest more money to live the life you want sooner.

Americans' Retirement Savings

It's no secret that Americans in general are ill-prepared for retirement. As recently as January 2020, a TD Ameritrade study found that 59% of individuals aged 40-49 have less than 100k saved for retirement. 53% of those aged 50-59 have less than 100k. Considering the average American worker also believes they'll need at least $1 million in assets to retire comfortably, it's clear there's some ground to make up. 

If you start saving at 25 and have the target of hitting $1 million by the age of 65, you need to save about $4,620 a year and realize an average annual return of 7%. If you want to have more than $1 million, you either need to save more or get a higher return. As you age, the amount you have to save annually to hit that goal rises significantly. Here's how much four different ages need to save to have $1 million in the bank at 65, assuming a 7% annual return.

Age At First Investment

Total Annual Investment Required

Total Investment (excludes compounding)

25 Years Old



35 Years Old



45 Years Old



55 Years Old



Often, when you're young, you can afford to put away a lot less than if you're closer to retirement age, but you probably can't afford to wait if you want to take advantage of compounding. The younger you are, the less money you have to save annually to reach your retirement investment goals. If you're an older American without much saved, it's even more critical that you invest as much as you can since you don't have much time for compounding to help your investments. Let's take a look at some areas where you might be able to make some changes.

Common American Spending Habits

Americans can be pretty wasteful with their money. One study on wasteful spending from The Ascent, a division of The Motley Fool, found that 50% of survey respondents frequently buy alcoholic beverages, and 54% frequently dine out. There's still hope though; a study by Hloom found that a significant number of respondents wanted to make cuts in these two areas. 

Let's take a look at some of the other areas where Americans typically waste money, and what that money would grow to if it was invested with a 7% annual return instead.

Expense Name

Average Annual Cost (rounded to nearest $)

Value if Invested for 30 years

Dinner Out



Impulse Purchases/Online Shopping



Drinks with Friends






Lunch Out



Rideshare (leisure)



Personal Care



Subscription Boxes



Cable TV



Fitness Expenses



TV/Music Streaming Services



Paid Apps






Bottled Water



Grand Total



Data source: SWNS Digital

Be Different

With all that said, once you make budget cuts, you'll need to figure out where to invest all your newfound money. There's something to be said for investing in what you know; one of the most successful investors ever, Warren Buffett, is a big proponent of understanding the business you're buying. If you stream a lot, consider opening a position in Netflix or Disney after you cut some other streaming services. If you enjoy fast food, buy some shares of McDonald's after you stop eating out so much. That way, your favorite companies are making you money instead of taking it from you, and your retirement will be that much more secure as a result.

Odds are good that you probably don't put up numbers like these in every one of these categories. However, there's no time like the present to review your spending habits and to tighten up in areas, but don't forget to actually divert your cuts to saving and investing. It'll be an exercise in futility if you cut out your cable subscription but then end up spending that money on more streaming apps; put your money to work for you as soon as you set it aside! Setting up automatic investments, or at least automatic transfers into a brokerage account, is a great way to keep yourself from spending the money.