Are You Eating Your Retirement For Lunch?

There are expenses you have to pay in connection with your job; no one calculates them unless they decide to do a comparison analysis that might support a work-at-home situation or a move to self-employment, but they’re there and they’re real.

Some, like commuting costs, are fixed—they are what they are and you can’t do a whole lot about them. Others, like buying clothes suitable for your employment, are somewhat within our control even though they’re completely inevitable.

Then there are those that we have a lot of control over—like lunch. We’re often reluctant to control that one, after all, lunch is a break in the day and an opportunity to refresh ourselves for the afternoon stretch. Having a nice lunch—which means different things to different people—is a way to do that.

But like a lot of slow drip type expenses, lunch can get out of hand pretty easily. It may only cost a few dollars a day, but if you add up those few dollars for a week, a month, a year, and many years, it can start to become serious money.

Like retirement money.

Let’s run some numbers on lunch

There really is an incredibly wide range that you can spend for lunch, and part of what makes it difficult is that you pay this expense each day in small chunks (hence the term “slow drip expense”). It just doesn’t always seem as big and ugly as it really can be. But if you’re looking to cut expenses, lunch can be a rich place to do it.

On the low end, there are fast food restaurants, where a typical meal runs about $6. That number seems pretty harmless, but if you eat at one every day, we’re talking about $30 a week. Over 50 weeks, that’s $1,500.

On the higher end are the name brand sit down restaurant chains, like Appleby’s, Chili’s, Ruby Tuesday and others. Though they advertise lunch time specials of, say $8.99, by the time you add a drink, tax and tip, you’re usually going to be out something closer to $15. If that’s your typical lunch destination, you’re looking at $75 a week, and $3,750 per year. That’s real money and I doubt most people go that route.

But let’s look at a scenario that’s probably more typical, like four days of fast food, and a sit down special on Fridays. At $6 a day for the four fast food meals, you’re at $24 by Thursday. On Friday you add the $15 sit down meal, and now you’re up to $39 for lunch for the week. Let’s round that up to $40. If you do that for a year, $40 X 50 weeks, you’re spending $2,000 a year on lunch.

If you were to end your restaurant lunches and decided instead to invest that money in an individual retirement account (IRA), what could it do for you?

If you’re 30 years old and you invest that $2,000—your lunch money—at 8% per year for the next 35 years, it will grow to $344,633.61! If your spouse does the same, you’ll have $689,267.22 combined!

This is what I mean by “eating your retirement for lunch”.

Now I’m not saying this will enable the two of you to retire by itself, but this example does illustrate how the casual spending of small amounts of money over a long period of time can have a serious impact on long range financial plans.

Looking at some less expensive lunch alternatives

Hopefully the example above will provide some motivation to take a serious look at how much you spend for lunch during the workweek. As you can see, it’s certainly worth a try. Ultimately, big money really does hang in the balance.

What can you do to avoid buying lunch in restaurants?

Last nights dinner for lunch. My wife and I have been in this habit for a lot of years. We cook larger meals, then parcel out the extra for the next days lunch. With careful planning, you can set up both lunch and dinner for the week without spending a whole lot extra for food.

Make a couple of large meals that you can pack for lunch. This is a way of making intentional left-overs. You can make a large amount of soup, stew or your favorite pasta dish in sufficient quantity to give yourself lunch for the week.

Brown bag it. This is the more traditional route of a sandwich, a drink and a piece of fruit or what ever snacks you have in the house.

In order to bring lunch from home you have to be intentional, which is most of what we’re trying to avoid by buying lunch out everyday. But as you can see, the savings—and the investment potential—are well worth the effort.

How much do you spend for lunch every week? Have you calculated what else you could do with the money? Are there other tips for lunch ideas?