The Smokers's Retirement Plan

Smokers are discriminated against, aren't they? Life insurance companies double their premiums, restaurants put them in special areas, many public places won't allow them to practise. Here's where they get their own back.

If you are a young smoker, you have one of the best opportunities for becoming rich by the time you retire, without working hard. If you aren't a smoker, maybe you are a typical North American, spending upwards of $3 every day on the likes of:

However, Marlboro cigarettes are top of the list for regular daily purchases. Let's say you smoke a pack a day. Scale these figures down if it's less. I understand that's about $3 in Canada.

Let's imagine that at age 25 you decide to give up the habit, cigarettes or chocolate bars or whatever, and save $3 a day.

The first saving is that you can earn $5 a day less (as an average taxpayer) since you were paying with after tax income. If you are paying top tax, you can earn $6 a day less. That's equivalent to a $2,190 a year raise.

Let's assume the cost of cigarettes rises with at about 5% a year. So you take the $3 a day let it compound in an RRSP earning 10% a year for 40 years until you retire. Have you any idea what your investment would be worth when you are 65 and needing a nest egg to retire on?

$995,997 !!!

What's more you'll be healthy enough to enjoy a long retirement, instead of being a drain on public health services.

With grateful acknowledgement to an idea I read in Talbot Stevens' fine book Financial Freedom Without Sacrifice - how to cut expenses, invest and increase security without lowering your standard of living.

Control your health