Giving up that daily latte can make you a millionaire.

It will, alas, take quite a few years of forgone lattes but you'll still be around to enjoy the money. And it might add to your retirement security.

I came to this conclusion after sitting in a Starbucks and noticing that I was the oldest person there. I was surrounded by relatively young people, most in their twenties and thirties. Some of them were tooling away on their laptops, making Starbucks the de facto "office of the future."

Spoil sport that I am, I couldn't help wondering if they were drinking lattes, cappuccinos, and other concoctions instead of saving for their distant wrinkled futures.

Would it be possible, in other words, to retire on the growth of small indulgences? Each of us has at least one. If it's not lattes, it's candy, cigarettes, late night snacks or something that we could (and maybe, should) do without.

The answer is a clear, "just about."

A fairly typical latte habit costs about $3.50 a day. That's $24.50 a week, $105 a month, and $1,277.50 a year. More when you put some change in the tip jar.   It's not that much, really. The kind of money only the truly compulsive can account for.

So what happens if you invest the money instead of drink it?

The answer depends on what you assume. I assumed a 25 year old who earned $30,000 a year, that inflation would average 3 percent a year, and that both the cost of her latte and her income would rise with the rate of inflation.

That's not exactly a wild set of assumptions since most people enjoy a few years of rising purchasing power. Then again, if you can afford a daily latte now, life can't be so bad.

After that I assumed that she would invest the money, each year, in a simple domestic stock index. She would earn a long-term average return of 10 percent a year until she reached the current age for "full" retirement benefit under Social Security. That's creeping up toward 67.

After five years the Latte Growth Fund had become $8,650. By the 10th year it was $23,959. It grew to $167,564 by the 25th year and $805,087 by the 40th.   That's enough to get most peoples' attention.

By the 42nd year, when she was 67, the Latte Fund had grown to $983,614, which is close enough to a million dollars for most people--- particularly for those who no longer drink coffee. That $983,614 also amounts to about 12.6 years of what she'll need for income in retirement, assuming that her cost of living will be 75 percent of her final (inflation increased) income of $103,821 a year.

Does all this sounds a bit familiar? It is. Many years ago I introduced the "Margarita Millionaire Plan", detailing how you could accumulate a cool million by retirement time by giving up only one margarita a day (with no allowance for inflation). That column is reprinted from time to time when I declare a Personal Margarita Day, much as I intend to declare a National Master and Commander Day on November 14th in honor of my hero Lucky Jack Aubrey.

Are there any sour grapes to throw at the idea of foregoing some minor indulgences to accumulate money?

Just one.

If inflation runs at an average of 3 percent, today's $3.50 latte will cost our 67 year old a bit over $12--- over 3 times as much. Then again, with $983,614 in hand, a $12 latte would be a very small indulgence.

Query: What's the popular choice, defer or indulge?

Answer: Indulge. According to the Social Security Administration, the poorest 40 percent of all older Americans get 82 percent of their total income from Social Security. The next 20 percent (the middle) get 64 percent and the next 20 percent get 46 percent of their income from Social Security. Basically, Social Security is where the money is for nearly 80 percent of all Americans.

Think about those figures for a while and tap water sounds like a good idea.

Tuesday: The Other Starbucks Solution

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Personal finance writer Scott Burns is syndicated by Universal Press. His twice weekly column appears in newspapers from Boston to Seattle. He is the Chief Investment Strategist for AssetBuilder, Inc. Readers can register at www.scottburns.com. Questions/comments can be posted directly. They can also be sent, without registration, to scott@scottburns.com. Questions of general interest will be answered in future columns and on this blog.

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