Can Gen Z & millennials retire early by eliminating restaurants & takeout?

What savings opportunities exist for millennials and Gen Z if they were to forgo dining out for a set period, such as five years? And where might it best be put to use to maximize their retirement savings?

Dollars saved from skipping restaurants and take-out for five years

According to the most recent U.S. Bureau of Labor Statistics Consumer Expenditures report, American household spending on food outside the home increased by 20.1% in 2022 compared to 2021, to an average of $3,639 for the year.1 Some quick math shows us that’s $303.25 per month. 

These stats didn’t differentiate between generations or ages, and available studies about the eating habits of Gen Z and millennials are outdated or mixed at best. Plus, every individual’s actual numbers will vary. But we can use the U.S. Bureau of Labor Statistics data as a reliable starting point.

Let’s take that $303.25 and round it down to an even $300. Now, with some of these dine-out expenses taking the place of grocery purchases for food prepared at home, we can’t put the entire $300 toward savings. Let’s subtract a hypothetical $100 a month from that $300 for the purchase of additional groceries for at-home prep in place of those dine-out orders.

That gives Gen Z and millennials $200 a month that can be put toward retirement instead of restaurants and takeout. For one year, that’s $2,400. Multiply that by five years and the savings total $12,000. Not a bad reward for cooking everything themselves, though very unlikely to fund an early retirement on its own.

So, where can this $12,000 be put to best use — maybe even grown?

Retirement savings options

The timing of saving this $12,000 could vary. Maybe they'll want to put chunks of that money away each month, each year or in one lump sum after the five years have passed. The types of accounts could help determine when money should ideally be deposited. With a high-yield savings account, for example, they’d want to make frequent, regular deposits to help the account grow steadily throughout those five years.

Here are some of the best options.

High-yield savings accounts

Offering higher interest rates than average savings accounts, high-yield savings accounts are a simple way to modestly — but noticeably — grow savings each year. And with interest rates at such high levels today, this is a great time to take advantage while those rates last. Using the $2,400 per year example, starting the year by depositing that into a high-yield savings account with a 4.5% annual rate could beef it up to $2,508 by year’s end.

Each bank offering these accounts has its own terms and conditions, with some enforcing minimum opening deposit amounts or offering lower rates than others. In any case, a high-yield savings account is a solid, low-risk way to grow one’s savings effortlessly in the background.

Individual retirement accounts

While 401(k) retirement plans are offered through employers, people can take retirement finances into their own hands by opening an individual retirement account (IRA). It isn’t as flexible as a savings account, as there are limits imposed by the IRS on how much can be deposited each year. For 2024, that annual maximum contribution is $7,000.2

If a Gen Z or millennial client wants to go this route with their savings, make sure they’re aware of the annual limits as well as the tax implications. Contributions to a traditional IRA may be tax deductible, and taxes are imposed upon withdrawals.3 Plus, if they retired at age 50, they still couldn’t touch this IRA for another nine-and-a-half years if they wanted to avoid penalization, since withdrawals before age 59½ may be subject to an additional 10% tax.4

Still, this could be an account they build over time and save for age 59½ while withdrawing from other accounts in the meantime during early retirement.


For a Gen Z or millennial client who’s up for rolling the dice, some or all of those savings could be put into the stock market. This is the riskiest option, as market volatility will grow or deplete what they’ve invested. But it’s high-risk, high-reward, with the potential to significantly grow their investment. 

If they’re willing to give it a shot, they could invest an amount they’re comfortable losing and see where it goes — as long as they understand that nothing with the market or any stock option is a certainty.


The full $12,000 could be used to fund an annuity that can be paid out when they retire or at another contractually specified time. Different annuity products — such as registered index-linked annuities (RILAs) or income annuities — exist to offer options for receiving income throughout retirement based on a person’s individual risk tolerance.

The $12,000 alone may be enough if they have other retirement benefits and savings to lean on, or it could be combined with other finances to fund the annuity. As with the other savings options, there are plenty of variables at play, and the best strategy will depend on each individual situation.

Helping your Gen Z and millennial clients plan for the future

TruStage™ has a wealth of resources financial professionals can use to help clients from all generations. One of particular importance with these kinds of “sacrificing” scenarios is our award-winning Behavioral Finance Advice program, which helps educate financial professionals on the behavioral and emotional aspects that must be navigated while planning for retirement. 

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