As if the health risks weren’t reason enough to quit smoking, the amount of money you could end up saving might be pretty impressive by the time you retire.
According to Paul Claireaux, researching on behalf of The Investors Chronicle, quitting smoking 20 cigarettes a day early on and putting the savings into a pension pot could give you a large wad of cash to look forward to.
Saving your life and your money
Taking into account basic taxpaying rates and 20 per cent income tax relief, Claireaux has calculated that a 20 year-old quitter could have a pension of £530,000 at the age of 55, and £935,865 at 65.
These sums rely on the investing of £7.60 a day savings into a SIPP, matching a 60% employer contribution. The government adds 20% for low-rate tax payers, which is what this pay-out is calculated to. High rate tax payers – receiving a 40% top up – will get even better results from quitting smoking.
Immediate savings are also on the table if you’re thinking of quitting smoking. If you’re on 20 cigs a day, that averages at £7.50 you’re spending. Cut that out and put the money into a pension, and you could be earning £2,774 a year. Add that to a grossed up personal contribution of £3,468 and the total input tallies up to £5,548.
After five years, you could be looking at an accumulated fund of about £42,696.
Think of your future
According to The Investors Chronicle, smoking 10 cigarettes a day after retirement will require a pension pot of £36,000. That’s because smokers can receive 22 per cent uplift on their annuity. This is because of the health risks naturally associated with smoking which can reduce life expectancy.
Even if you’re not looking to kick the habit right now, you can already save money by using an e cigarette. You can use the calculator below to see how much you could save just by switching to an electronic cigarette.
Created by ECigarette Direct