Saving $ 10 a day - Can't Retire on that.

1 year ago
5 Min Read
966 Words

Recently I read a couple posts that got me thinking about saving money, budgeting and retirement.

TL;DR save around 33% of your income for 25 years to retire. Unless you are making $33 a day and living fine, $10 a day ain't enough.

@financialadvice was talking about Budgeting Basics. He said do you want to retire early?

Yes I do!

@tarazkp was mentioning Every little bit adds up. He wrote that if you add up the price of small purchases over a long time, things really add up.

Indeed they do!

So I thought what if I put these two concepts together and add a little math magic?

Instead of talking about how to budget, why I need to budget, or thinking of all the small things, I'm just going to go with:

I can save $10 a day, but how much do I need to retire?


How to save $10 a day?

Get an income/job and don't spend all your momey....duh!

In any case, many people can easily save $10 a day which is $3650 a year. That's like 10% of an average income in many developed countries. Not bad in your 20s, maybe aim for $25 $ a day in your 30s and $50 a day in your 40s until retirement if you want an easy and early one.

This is an example made to be easy.

10$ a day parameters

Let's say we are 40 years old. Let's say we retire at 65.

The Math:

$10 x 365days x 25 years = $91250

I'm not gonna calculate leap years, but there will be 6 or 7

But wait, we ain't just gonna keep that under our pillow. Let's dump it into a bank at 2.5% interest (this is possible in many places after tax). Also, let's say we are paying in once a month (3650 ÷ 12= $ 304.17).


End Balance: $126,099.43
Starting Amount: $0.00
Total Contributions: $91,251.00
Total Interest: $34,848.43

As you can see for saving a total of $91251 over 25 years we earned $34848.43 in interest at 2.5% a year. We are 65 and it is time to retire!

Two cases emerge:

  1. Let's say we die 25 years after retirement at 90 years old. This is sufficiently beyond average life expectancy now. It will give us more than 10$ a day to spend which is important because inflation sucks.

  2. Let's say we go the distance and live as long as 10$ a day will take us. Life extension is for real.

Time to get an annuity!

Spending $126,000 over 25 years

Sorry folks I rounded down a little. Let's say we treated ourselves to Applebee's. (No reason other than I heard old people like it there from South Park)

So we have 2.5% interest again, monthly payouts for 25 years until we are 90 and don't really expect to be living it up.


Case 1 (fixed length):

You can withdraw $563.47 monthly ~ ~18.52 a day.
After 25 years, $563.47 is equivalent to $303.93 in purchase power (more on this later).
Total interest earned: $43,040.86.

Case 2 (fixed Payment)

We saved 304.17 a month for 25 years and we want to spend this much ~ $10 a day.
You can withdraw $304.17 monthly for 77.72 years.
After 77.72 years, $304.17 is equivalent to $44.63 in purchase power (more on this soon).
Total interest earned: $157,689.46.

77.72 years! Holy crap, we could live to 142! that's more than the world records unless you count mythology.

But there are other variables, most important with fixed payments is inflation.


For the record, I set it at 2.5%.

For case 1 (fixed length) After 25 years, $563.47 = $303.93, which is very similar to $304.17 which we were contributing monthly. This is alright.

For case 2 (fixed payment) After 77.72 years, $304.17 becomes $65.27 a month this is starting to hurt.

Remember we were saving for 25 years and there was inflation during that time, too.

We need another calculator to find out what inflation will feel like.


$10 with inflation rate 2.5% = $2.91, 50 years ago in 1969. Moon money!

I'm not in the mood to get into too much detail, but there is a historic CPI in the link in the heading. Put it this way, in 50 years 10 dollars a day won't be very much even with modest interest. I think the easiest way to look at it is things double in price every 25 to 30 years. There are exceptions, sadlt.

Saving is Hard

$10 a day will be worth around $ 5 a day in 25 years and $ 2.90 a day in 50 years assuming inflation averages around 2.5%. If you get 2.5% interest a year in interest that will be manageable.

Most people will invest in funds and such which tend to average at least double inflation, more of a consideration. Fortunately we have better calculators, unfortunately we have taxes.


Not on $10 a day unless you live somewhere cheap where making 10 dollars a day is tough.

Experts guess you need 70 to 80 % of your current income. Why less? Well you pay less tax, you probably have less costs commuting to work, less mortgage or none, less family expenses, not saving for retirement, etc.

I think 100 dollars a day is cool, especially if you own you home. You will need a 500 dollar a month pension and 1 million dollars to start, more is better. It's possible to get $1 million saving around $ 50 a day for 25 years.

More on that later.

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