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.
- Pop and Cola
- Chocolate bars and candy
- Fast food snacks
- The tabloid press and sensation magazines
- The lottery
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