You’re a Smoker? Would You Rather Be a Millionaire?

I’m actually impressed by how many fewer people smoke today than a couple of decades ago.  Maybe the federal mandate requiring large-size warnings with all cigarette ads really did make a difference.  For those of you who still smoke, particularly younger folks, you’ll want to avoid New York City.  They just raised the price of a pack of cigarettes to $13!

Would You Rather Be a Millionaire?

This got me thinking…If you stopped smoking and invested a two-pack-a-day habit in stocks, how much would you accumulate in thirty-five years?  You’re not going to believe the answer: over $2.2 million!   I assumed an average return on stocks of 9%.

But the savings don’t stop there.  Smokers pay a much higher premium for life insurance.  For example, let’s assume you’re a thirty-year-old dad who purchases a 30-year term life insurance policy for $1.5 million of death benefit.  Invested properly, this death benefit would initially provide $5,000 per month cash flow for your surviving family and allow annual cost of living increases.  As a smoker, your annual premium would be about $3,700 per year versus $1,000 for the non-smoker.  If we invested that difference to age 65, you’d accumulate another $550,000! So, if you live in the Big Apple, the real cost of smoking is over $2.7 million!

Ok, I’ll admit that things in New York City can get a little crazy but you have to admit, those are very interesting numbers.  What would it look like for a two-pack-a-day smoker where the average pack cost a measly $5?  The money saved on life insurance is unchanged so you start with over $550,000.  Stopping smoking and investing a two-pack-a-day habit would yield another (almost) $900,000 so let’s round up to total investment account value of $1.5 million.

How Long Will You Live?

If a million-and-a-half bucks is not incentive enough, life insurance company statistics indicate that a smoker’s life expectancy is significantly less than the non-smoker.  What is your life expectancy?

More and more businesses and municipalities are either banning smoking or restricting where smoking is permitted.  This is one area where there is no debate…everyone benefits when there are fewer smokers.