Jul. 17, 2006 - The Marlboro Man & Retirement

I am not a smoker.  Never have been and never will be.  My dad was a 2+ packs per day addict for 27 years so I grew up watching the devastation cigarettes cause.  Thankfully, he quit 23 years ago cold turkey by God's grace or he probably wouldn't be alive today to enjoy his grandchildren.

Needless to say, I don't normally pay attention to the price of cigarettes.

The other day, however, I noticed a large banner outside the corner gas station advertising a special deal on Marlboros for $4.50 per pack.  I was shocked.  I'd hate to see the normal price.  I also know that others pay even more due to their state's tax structure.

That got me to thinking about the financial impact of smoking because it's usually the little, seemingly inconsequential expenses that can make or break us over time.  I wondered what would happen if that money were put away for retirement instead of being consumed by cigarettes.

Retirement Up in Smoke

Let's assume the Marlboro Man goes through one pack per day.  That means in a typical month he will spend an average of $135 on cigarettes, or $1,620 per year.  Imagine if that same amount of money were saved in a Roth IRA every year (assuming the price of cigarettes doesn't change).  After 30 years of growth at an 8% annualized rate of return the Roth IRA would be worth $198,200!  That's a lot of tax-free retirement money to send up in smoke.

If you're a Marlboro Man, I guess the choice is to "kick the habit" now or "kick yourself" later when you retire.   

On the other hand, the Marlboro Man does have one advantage when it comes to retirement planning -- he probably doesn't have to worry about outliving his assets. 

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