Do Americans waste retirement savings on eating out?

The Cost of Dining Out: A Hidden Impact on Retirement Savings

When it comes to dining out, many people often say, "I'll just have an appetizer." But for most, that’s not the case. Over the years, eating out has become a significant part of our lives, both in terms of cost and impact on our financial well-being. It's no secret that restaurant meals can be expensive, especially when you consider the hidden costs involved.

Dining out is more than just the price of the food. You're also paying for labor, lighting, insurance, building rent, and other overhead expenses. Plus, there's the added cost of tips, which can range from 15% to 20%. These factors make eating out a luxury that many Americans are increasingly finding hard to afford, especially with rising food prices.

A recent letter from a reader raised an interesting concern about how frequent dining out might affect retirement savings. They suggested that if a family spends $100 a day on eating out, over the course of 20 years, that could add up to over $1 million. If this habit continues even after the kids are grown, the total could easily reach $2 million over 40 years. While this may seem like an exaggeration, the underlying point is valid—every dollar spent on dining out could be a dollar that could have been saved or invested for the future.

This concern is not isolated. Recent data shows that Americans spend a considerable amount on food outside the home. According to the U.S. Department of Agriculture, total spending on food exceeds $2.63 trillion annually. On average, people spend between $1,990 and $2,500 a year on dining out, with takeout adding another $3,640. This means that the average American spends almost as much on food outside the home as they owe in student debt.

The Rising Cost of Eating Out

Food prices have risen significantly since 2020, making dining out increasingly out of reach for many middle-class families. Some restaurants have started adding extra fees, such as credit-card processing charges, container (or “doggy bag”) fees, and kitchen-service charges. These additional costs only add to the overall expense of eating out.

Despite these challenges, some consumers continue to enjoy dining out, even if it means cutting back on other expenses. For instance, 43% of Americans say they spend $20 or less per person when they eat out, while others spend more. According to a 2024 survey by US Foods, 30% of respondents spend between $21 and $30, 13% spend $21 to $40, and 14% spend more than $40 per person each time they dine out.

The Financial Implications

The financial implications of frequent dining out can be substantial. If someone starts spending $2,250 a year on eating out at age 25, by the time they reach 80, they would have spent $123,750. Including takeout, this amount could rise to $203,784. While this doesn’t quite match the $2 million figure mentioned earlier, it still represents a significant sum that could have been used for other purposes, such as buying a house or saving for retirement.

Experts suggest that people who dine out frequently tend to underestimate their food budget. This can lead to questionable financial decisions, especially when it comes to long-term planning. Eating leftovers at home or using apps like Too Good To Go can help reduce food waste and save money. In fact, the U.S. is one of the largest food-wasting countries in the world, with nearly 60 million tons of food discarded each year.

Finding Balance

While dining out can be a delightful experience, it's important to find a balance between enjoying meals out and managing finances wisely. Whether it's through meal planning, using discount apps, or simply being mindful of spending habits, there are ways to enjoy food without compromising financial stability.

In the end, nothing tastes as good as saving money. By making informed choices and being conscious of spending, individuals can ensure that their dining experiences don't come at the expense of their future.