Can quitting smoking help you save for retirement?

Can quitting smoking help you save for retirement?


If you smoke cigarettes in the United States, you are not alone. A recent survey estimates that 37.8 million American adults currently smoke cigarettes, with more than 16 million living with a smoking-related disease [1]. And if you’re looking for one more reason to quit smoking this year, this may be the clincher. Taking the money you’d save by NOT buying another pack of cigarettes, and instead putting that into a 401(k) retirement savings account, can put you on the path to retirement readiness.

How quitting cigarettes can help you fund retirement

Before we break down the math on how quitting smoking can help you fund your future and prepare for your retirement, you have to make the decision to ultimately stop smoking—for good. Personal health and financial wellness are both extremely important in the grand scheme of things, and both are threatened when you decide to smoke.

So how can the simple act of quitting smoking put you on the path of retirement readiness? Well, kicking the costly habit will keep more of that hard-earned cash in your possession, not in tobacco companies’. A recent study found that the average cost of a pack of cigarettes is $6.16, including the product’s rising taxation. Assuming a pack-a-day smoking habit, the annual cost of smoking is about $2,250 [2].

Let’s say your current age is 30 and your current salary is $36,000. You decide to invest the $2,250 you saved from kicking your smoking habit into an employer-sponsored 401(k) plan. The money you saved from smoking alone accounts for 6.5 percent of your annual salary, which you are now putting into your 401(k) account.

Now let’s say every year until you are 65, you earn a 1.5 percent salary increase that you put directly towards your retirement savings. Assuming a 6 percent annual return on your investment, with no employer match, your retirement account would be worth about $322,169 when you turn 65. If your employer does contribute a match, say 100 percent up to 3 percent, your retirement savings account could increase to $470,863, just under half a million dollars. Quitting smoking now becomes much more “worth it.”

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Interested in learning how much you personally could save by kicking your smoking habit and using the money you save to fund your retirement? Check out this handy calculator and put yourself on the path to saving for your future.