In honor of September 29th being International Coffee Day, let's take a look at what we call the "Latte Myth," or the misconception that splurging on a latte or avocado toast is what's causing the retirement crisis in America.\r\n\r\nWe\u2019ve all heard it before: there\u2019s a retirement crisis in America. People aren\u2019t saving enough for a variety of reasons, which is causing \u00be of Americans to not meet conservative retirement savings targets based on their age and income. \r\n\r\nAlso, 68 percent of Americans who are in the pre-retirement stage (between the ages of 55 and 64) have less money saved for retirement than they currently make in a year. So needless to say, there\u2019s a problem here. But what\u2019s causing it?\r\n\r\nRetirement Crisis Myths\r\nThere\u2019s no question that statistics like these are sobering and cause for concern. But some myths have also sprung up around the topic of saving for retirement. One of these could be referred to as the \u201cmyth of the latte.\u201d\r\n\r\nYou\u2019ve probably heard it before \u2014 it goes something like this: One reason why people are coming up short in saving for retirement is because they spend too much money on \u201cfrivolous,\u201d non-essential things like coffee and lattes. But is splurging on coffee really jeopardizing the retirement future of Americans?\r\n\r\nLet\u2019s look at a hypothetical example and crunch some numbers to see. \r\n\r\nSusie loves to stop and see her favorite barista on the way to work and order a special concoction latte that he\u2019s famous for. The latte costs $5 and Susie buys one four days out of every week.\r\n\r\nSo, Susie\u2019s total latte expenses are $80 a month. Now let\u2019s assume that instead of buying lattes four days a week, Susie contributed this money to an IRA. If she earned a 6% annual rate of return, Susie\u2019s IRA would be worth a little over $54,000 in 25 years.\r\n\r\nOf course, $54,000 would be a nice addition to her retirement savings. But this certainly isn\u2019t enough money for most people to retire on comfortably. So, suggesting that refraining from buying lattes and other small, relatively inexpensive luxuries is the key to solving the retirement crisis is a wild oversimplification, at best.\r\n\r\nPractical Steps to Take\r\nInstead of worrying about whether buying coffee is putting your retirement at risk, here are four practical steps you can take to increase the chances of a financially secure retirement.\r\n\r\n1. Remember the "Rule of 72."\r\n\r\nThis is an important rule to remember when saving for any long-term financial goal like retirement. According to the Rule of 72, your money will approximately double in the number of years equal to 72 divided by your return. \r\n\r\nFor example, if you earn an average annual return of 6%, your initial investment will double in 12 years. Let\u2019s say that you contribute the maximum amount allowed by law to your IRA each year, which is $6,000 in 2019 (for anyone under the age of 50). In 12 years, your $72,000 investment will have grown to $107,292.83. In the next 12 years, if you don't invest any more, your $107,292.83 could grow into $215,894.25. Turning $72,000 into $215,894.25 is nothing to sniff at! And if you contributed $6,000 consistently for 24 years, you'd have $323,187.07, having contributed $144,000 of your own money.\r\n\r\n2. Make retirement savings a priority - and make it automatic.\r\nWith so many immediate financial priorities, saving money for a long-term goal like retirement can seem unimportant. But realizing the power of the Rule of 72 makes it easier to prioritize retirement saving. \r\n\r\nThe best way to follow through on your commitment to retirement saving is to make your savings automatic. If you participate in a 401(k) plan at your workplace, you can fill out a form requesting that a certain amount of money be automatically transferred into your retirement account each pay period. When you never see the money, you never miss it.\r\n\r\nRead More: The Average 401k Balance by Age\r\n\r\n3. Take advantage of an employer match.\r\nWhile they say there\u2019s no such thing as a free lunch, employer matches of 401(k) contributions are about the closest thing there is to free money. For example, some employers contribute 50 cents to employees\u2019 401(k) accounts for every dollar that employees contribute. This equates to a guaranteed, no-risk 50% return on your investment!\r\n\r\n4. Leave your retirement savings alone.\r\nTapping retirement accounts before reaching retirement age to pay for non-retirement related expenses is one of the biggest mistakes many people make. Not only does this lessen the amount of money available to withdraw at retirement, but there may also be a penalty and tax consequences for taking early distributions from a retirement plan.\r\n\r\nBut what about withdrawing retirement funds to cover the down payment on a first home? Some people justify early retirement plan withdrawals for this reason, but there are other ways to obtain funds for a down payment that don\u2019t entail taxes and penalties. For example, you could start a separate down payment savings fund or possibly borrow the money from parents or relatives.\r\n\r\nRead More: When Can I Withdraw From My IRA or 401k Penalty-Free?\r\n\r\nOur Take: Enjoy That Latte!\r\nYou don\u2019t have to deny yourself inexpensive luxuries like sipping a latte on the way to work in order to save money for a comfortable retirement. Instead, stay focused on practical retirement saving steps like these \u2014 and enjoy your latte guilt-free!\r\n\r\n\u00be of Americans not meeting conservative benchmarks: National Institute on Retirement Security. Disclaimer: The information on this website is for informational purposes only and does not constitute a complete description of our investment services or performance. No part of this site nor the links contained therein is a solicitation or offer to sell securities or investment advisory services, except where applicable in states where we are registered, or where an exemption or exclusion from such registration exists. Third party data is obtained from sources believed to be reliable. However, Personal Capital Advisors Corporation cannot guarantee that data\u2019s currency, accuracy, timeliness, completeness or fitness for any particular purpose. Certain sections of this commentary may contain forward-looking statements that are based on our reasonable expectations, estimate, projections and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not a guarantee of future return, nor is it necessarily indicative of future performance. Keep in mind investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.