$257,781.07 | The Long-term Cost of Coffee

[pictured above:  my wife and friends enjoying a morning cup of Starbucks Pike's Place Roast at Red River Gorge]

The Spend | Coffee

My wife and I love us some coffee. We're big fans of Starbucks, and our day just wouldn't start the right way without a heaping dose of Pike's Place Roast. So, what do we pay for a big cup of the good stuff?  About forty-two cents.

The Opportunity Cost | Retirement

Of course, it's going to cost you quite a bit more if you're buying that same coffee at Starbucks. Instead of the low price of $0.42, you'll have to pay $1.95 instead. That difference of $1.53 per cup doesn't seem like much until you take a long look at it over time.

The Long-term Opportunity Cost | 30-Year Value

Let's say that instead of my daily wake-me-up at home, I rolled through Starbucks instead. That turns into $10.71 per week. For the year, that adds up to $556.92 - a little more significant than ten bucks.

Now, since I do drink that tasty Starbucks nectar at home (thank you, French press), I save $556.92 per year that goes straight into our retirement savings. Thanks to tax breaks and a generous employer match, that $556.92 turns out to be quite a bit more.

Here's the breakdown:  $556.92 is the after-tax savings. Since retirement contributions are pre-tax, you basically get a tax deduction worth $239.59. Add to that an employer's matching retirement contribution of $398.26 and what you wind up saving for retirement is $1,194.77.

Assuming you invest that money at normal market rates of return, you'll end up with $257,781.07 after thirty years.

Since I like big numbers spelled out, that's TWO HUNDRED FIFTY-SEVEN THOUSAND SEVEN HUNDRED EIGHTY-ONE DOLLARS AND SEVEN CENTS.

Boost Your Retirement Now

Look, coffee is awesome! But it sure as hell isn't worth $1.95/cup. Buy yourself a French press and add a few minutes to your morning to boil water, brew your coffee, and clean the carafe. It's worth the quarter-million in savings.

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