Vision Credit Education, Inc.

Most Americans have not saved enough to fund their retirement. Many feel that with the increases in gasoline and food prices that there is nothing left to save. However, small purchases that we make everyday may explain why there is nothing left to save.

Cigarette prices definitely take a chunk out of some budgets. Smoking is very popular among poor households, many of which have almost zero savings. Even the poorest individuals could retire on what they spend on cigarettes.

The Costs

Cigarette prices vary widely by state, but it is mostly due to the tax placed on them. We will compare two states which currently have the highest or lowest cigarette taxes of any state.

New Jersey

A pack of cigarettes in New Jersey costs $6.51 including all taxes. Someone buying a pack a day would spend $2,377.78 a year on cigarettes, or about $198.15 a month.

A smoker that begins their habit at age 18 and retires at age 62 would have paid $107,000 for those cigarettes in today’s prices. Remember that the price of cigarettes will go up in subsequent years, so the actual number would be much higher!

If that person invested that $198.15 each month into a retirement plan earning 9% interest, they could have $1,467,262 available in their retirement fund at age 62. Instead, they will likely end up at age 62 with no savings. Even worse, their health expenses would likely be far higher than a non-smoker.

Many people say they cannot afford to pay almost $200 a month for retirement. Yet they can afford that pack of cigarettes everyday! The cost is the same.

South Carolina

In South Carolina, the cost is $3.41 for a pack. That still calculates to $768.566 available for retirement at age 62.

National Average

The national average price for a pack of cigarettes is $4.63. That calculates a $1,043,537 retirement account balance at age 62.

The true costs of smoking are much higher due to health risks, medical bills and insurance costs. In addition, smokers tend to miss more work due to respiratory-related illnesses.

If you feel you cannot afford to save for retirement, think about what you are spending on that pack of cigarettes. If you do not make a change now, your retirement may go up in smoke!