How to Retire a Millionaire if You’re a Smoker

With the average packet of cigarettes in Australia now costing around $25, smoking is becoming worse for your wallet than it is for your health… Okay maybe not that bad, but one cannot deny the financial burden of smoking. A pack a day smoker will spend $9,125 per year on smoking. That’s enough to take the family overseas for a holiday. Keep in mind, that this is an after-tax cost, you have to earn closer to $12k to fund this habit.

So how can one become a millionaire if they smoke? Obviously I am going to say “quit smoking”. But how does this make me a millionaire? Let’s add up the actual cost of ‘pack a day’ smoking over the working life of an average Australian (age 18-65), that’s 47 years. For the sake of the argument we will take out inflation and the inevitable increased taxes that will be applied to cigarettes as time goes on. 47 years at $9,125 per year, that’s a total of $428,875 on cigarettes. But let’s say instead of buying those cigarettes, you put that money into a savings account or managed fund, what could this actually look like after those 47 years?

Smoking Graph

It looks like $1,721,7961 assuming a conservative interest rate of 5.00%. Not a bad sum to retire on for giving up a deadly habit. The argument will always be “well where is your $1.7 mil?!”. Which is probably a fair statement. But the purpose of this article is to show 1. Smoking is a huge financial burden, not just health burden and 2. What a small contribution each day to your retirement savings can look like over the long term.

Smokers are actually at an advantage here, they have already ‘built’ a life around being able to afford cigarettes. They are able to drop the habit and have instant cash flow freed up. Those who don’t smoke might not be in a position to give up a ‘useless’ habit and free up $25 per day.

So if you truly don’t care or can’t comprehend the negative health consequences associated with smoking, quit anyway, because it might mean you can retire on a yacht, not a dingy.

  1. Does not take into account inflation. Contribution of $25 per day, compounded monthly over a period of 47 years at an interest rate of 5%. Tax not taken into consideration.

Information current as of 18 May 2017

This information is of a general nature only and has been prepared without taking into account your particular financial needs, circumstances and objectives. While every effort has been made to ensure the accuracy of the information, it is not guaranteed. You should obtain professional advice before acting on the information contained in this publication.

This article does not take into account your current physical condition or medical background, please consult a doctor or physician before beginning any diet or exercise routine or if you’re considering quitting smoking.

 

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