My 1-5-20 Retirement Nest Egg Rule

Retirement Nest Egg

My Ultimate 1-5-20 Retirement Nest Egg Rule

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The Hard Truth!

Have you ever considered what the effect is of your discretionary expenditure on your future next egg?  

If you haven’t, then I encourage you to read on. The simple calculations you’ll learn in this post could drastically change your perception of discretionary expenditure in future. 

The following future cost calculations are based on the purchase cash cost today equivalent versus opportunity cost in 20 years with compounding if invested at a 7% real rate of return (numbers are rounded to the nearest dollar).

Cost Today —> Opportunity Cost in 20 Years

$4 Coffee —–> $20
$12 KFC Box Meal —> $59
$150 New Shoes —> $746
$400 New Suit —> $1,990
$1,500 New Laptop —> $7,464
$25,000 New Car —> $124,402

Website calculator used: opportunity cost calculator

In 40 years’ time, you could approximately double those figures. Think about that for a minute… That new car purchased worth $25,000 today. That’s  costing close to $250,000 in lost retirement savings!!! 


Most times when I’m spending discretionary money (sometimes I forget)  I do a little calculation in my head, I multiply the cost price by 5 and I get a good indication of what this is costing my retirement nest egg in 20 years’ time.

That’s my 1:5:20 Rule!

Her it is again – take any one (1) discretionary item, multiply cost by five (5) and you get an approximation of the opportunity cost in twenty (20) years’ time.

It’s an eye opener…1:5:20

The first time I made these calculations it frikkin hurt, cause I cast my mind  back on some major purchases and realised how much of an opportunity I had missed If I’d instead decided to save (or invest) my hard-earned dollars.

So, in future, ask yourself, “do I really need this?” Often, you’ll realise  you don’t, so don’t spend the cash, and feel good about forging a larger nest egg and one step closer to freedom.

An Entrefineur’s best friend!

Spending Opportunity Cost Calculator

Try this resource for your own calculations: opportunity cost calculator.

Hopefully this article has helped you to drop your expenditure rate and upped your savings rate! 

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The EntreFIneur
The EntreFIneur

EntreFIneur is a passionate frugalist, FI enthusiast, experimenter, ideator and entrepreneur. He's also a family man and when he has time, an active fitness fiend and outdoor hobbyist.

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