Coffee Talk

Allan Rolnick, CPA

America has always been a land of opportunity, but most Americans don’t seem very good at managing those opportunities. The average American has just $87,000 saved for retirement, dimming hopes for endless days of pickleball in the sun. Nearly 4 in 10 can’t cover $400 in an emergency, which explains a landscape littered with dollar stores, pawnshops, and payday lenders. Those depressing numbers create an opportunity for personal finance gurus to make a buck or two helping the rest of us save a buck or two. Folks like Suze Orman, Dave Ramsay, and Dave Bach understand that the difference between what we make and what we spend is the fuel that powers long-term growth. Widening that gap puts more to work for the future. And so, to create more savings, they’ve taken dead aim at America’s coffee cartel. That’s right—blame Starbucks and their endless imitators for your retirement insecurity. Suze Orman is especially snide about the future poverty brewing in your morning java. “I wouldn’t buy a cup of coffee anywhere, ever — and I can afford it — because I would not insult myself by wasting money that way,” she told CBNC. That’s because takeout coffee is a “want,” not a “need.” Instead, she says, you should put that money to work in the market! Just how much does your caffeine habit cost your future? “You need to think about it as: You are peeing $1 million down the drain as you are drinking that coffee,” she fumes. And where does she come up with that million dollar figure? Let’s say you spend $100 on coffee each month. If you were to put that $100 into a Roth IRA instead, after 40 years, the money would have grown to around $1 million with a 12 percent return.

The problem here is that Suze has loaded up her cup with a couple of shots of “lying with statistics.” First of all, most Americans don’t have 40 years left to grow their savings. And if they did, Orman’s 12% return is a fantasy. Even if we assume you put your entire account in stocks, the average long-term return of the S&P 500 is just 10% per year. Third, inflation eats away at the long-term value of that return. So, let’s assume a more realistic 30- year timeframe and an after-inflation real return of 7%. Now, that monthly $100 grows to just $122,000. And how much pickleball will that pay for? Well, one common rule of thumb holds that you can spend 4% of your nest egg every year to keep up with inflation and never run out of money. Four percent of $122,000 means…hey, look at that, a whopping $93 per week! At least you’ll finally be able to enjoy your coffee without guilt! The coffee scolds aren’t afraid to be hypocrites, either. Shark Tank investor Kevin O’Leary agrees that Starbucks is an unnecessary splurge: “I never buy a frape-latte-blah-blah-blah-woof-woofwoof.” But O’Leary is one of America’s biggest wristwatch collectors, with millions of dollars of wrist candy. Surely, he doesn’t need more than a dozen Rolexes. Yes, it’s important to weigh needs against wants, especially when it comes to balancing tomorrow’s big needs against today’s fleeting wants. But no one looks forward to a spartan lifestyle of necessities only. Besides, have you ever turned on a TV and seen how much stuff there is for sale? Saving for retirement doesn’t have to mean cutting out everyday luxuries like your morning joe. If you’re like most Americans, you spend way more on taxes than coffee. Call us, and let’s take a look at cutting that bill first!

Allan J Rolnick is a CPA who has been in practice for over 30 years in Queens, NY. He welcomes your comments and can be reached at 718-896-8715 or at

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