How Cigarettes Could Send Your Retirement Up in Smoke

By Markets Fool.com


It's probably obvious even to non-smokers that cigarettes have gotten more costly over the years. About 20 years ago, in 1996, the average retail price of a pack of cigarettes was around$1.85. Today, it's closeto $7.30. That's just the average, though -- the price varies extremely widely depending on a purchaser's location. No matter where you live or how much you pay per pack, your smoking habit is stealing from your retirement.

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Check out the table below, which presents the average price of a pack of cigarettes in 2016 for each of our 50 states and the District of Columbia. The averages are from the folks at TheAwl.com, which issues a price roundup each year. (Note that a sizable chunk of most of the prices is made up of state excisetaxes, which ranged from $0.17 per pack in Missouri to $4.35 per pack in New York, as of August. Many cities and/or counties in each state also impose taxes.)

 

State

 

 

Avg. Price per Pack

 

 

Cost of a Pack a Day Over One Year

 

 

Cost of a Pack a Day Over 20 Years

 

 

Kentucky

 

 

$5.19

 

 

$1,894

 

 

$37,887

 

 

Tennessee

 

 

$5.28

 

 

$1,927

 

 

$38,544

 

 

North Dakota

 

 

$5.32

 

 

$1,942

 

 

$38,836

 

 

Hawaii

 

 

$5.35

 

 

$1,953

 

 

$39,055

 

 

Missouri

 

 

$5.40

 

 

$1,971

 

 

$39,420

 

 

Idaho

 

 

$5.45

 

 

$1,989

 

 

$39,785

 

 

Florida

 

 

$5.57

 

 

$2,033

 

 

$40,661

 

 

Mississippi

 

 

$5.59

 

 

$2,040

 

 

$40,807

 

 

Alabama

 

 

$5.62

 

 

$2,051

 

 

$41,026

 

 

North Carolina

 

 

$5.81

 

 

$2,121

 

 

$42,413

 

 

West Virginia

 

 

$5.89

 

 

$2,150

 

 

$42,997

 

 

Arkansas

 

 

$5.94

 

 

$2,168

 

 

$43,362

 

 

Ohio

 

 

$6.01

 

 

$2,194

 

 

$43,873

 

 

Oklahoma

 

 

$6.04

 

 

$2,205

 

 

$44,092

 

 

Indiana

 

 

$6.16

 

 

$2,248

 

 

$44,968

 

 

Wyoming

 

 

$6.22

 

 

$2,270

 

 

$45,406

 

 

Oregon

 

 

$6.24

 

 

$2,278

 

 

$45,552

 

 

Colorado

 

 

$6.31

 

 

$2,303

 

 

$46,063

 

 

Virginia

 

 

$6.31

 

 

$2,303

 

 

$46,063

 

 

South Carolina

 

 

$6.34

 

 

$2,314

 

 

$46,282

 

 

Georgia

 

 

$6.44

 

 

$2,351

 

 

$47,012

 

 

Delaware

 

 

$6.60

 

 

$2,409

 

 

$48,180

 

 

Montana

 

 

$6.70

 

 

$2,446

 

 

$48,910

 

 

Utah

 

 

$6.84

 

 

$2,497

 

 

$49,932

 

 

New Hampshire

 

 

$6.90

 

 

$2,519

 

 

$50,370

 

 

Louisiana

 

 

$6.92

 

 

$2,526

 

 

$50,516

 

 

Maryland

 

 

$7.00

 

 

$2,555

 

 

$51,100

 

 

Nebraska

 

 

$7.01

 

 

$2,559

 

 

$51,173

 

 

South Dakota

 

 

$7.09

 

 

$2,588

 

 

$51,757

 

 

California

 

 

$7.16

 

 

$2,613

 

 

$52,268

 

 

New Mexico

 

 

$7.37

 

 

$2,690

 

 

$53,801

 

 

Nevada

 

 

$7.57

 

 

$2,763

 

 

$55,261

 

 

Texas

 

 

$7.57

 

 

$2,763

 

 

$55,261

 

 

Wisconsin

 

 

$7.57

 

 

$2,763

 

 

$55,261

 

 

Michigan

 

 

$7.60

 

 

$2,774

 

 

$55,480

 

 

Maine

 

 

$7.67

 

 

$2,800

 

 

$55,991

 

 

Iowa

 

 

$7.73

 

 

$2,821

 

 

$56,429

 

 

Kansas

 

 

$7.83

 

 

$2,858

 

 

$57,159

 

 

Arizona

 

 

$8.10

 

 

$2,957

 

 

$59,130

 

 

Washington, D.C.

 

 

$8.15

 

 

$2,975

 

 

$59,495

 

 

New Jersey

 

 

$8.37

 

 

$3,055

 

 

$61,101

 

 

Minnesota

 

 

$9.07

 

 

$3,311

 

 

$66,211

 

 

Pennsylvania

 

 

$9.50

 

 

$3,468

 

 

$69,350

 

 

Connecticut

 

 

$9.65

 

 

$3,522

 

 

$70,445

 

 

Washington

 

 

$9.75

 

 

$3,559

 

 

$71,175

 

 

Alaska

 

 

$10.00

 

 

$3,650

 

 

$73,000

 

 

Rhode Island

 

 

$10.00

 

 

$3,650

 

 

$73,000

 

 

Vermont

 

 

$10.43

 

 

$3,807

 

 

$76,139

 

 

Massachusetts

 

 

$10.67

 

 

$3,895

 

 

$77,891

 

 

Illinois

 

 

$11.26

 

 

$4,110

 

 

$82,198

 

 

New York

 

 

$12.60

 

 

$4,599

 

 

$91,980

 

Data source: Theawl.com, author calculations.

 

Big costs, big damage

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Clearly, a single pack of cigarettes is rather costly in many locations. Even the lowest price, in Kentucky, costs more than $5 -- and in 20 states, the average price tops $7.25, the current federal minimum wage rate.

That can certainly put a crimp in a smoker's spending money, but it can have an even more disastrous effect on their financial future. Every dollar that goes toward cigarettes is a dollar that could have been deployed in some other way, such as on contributions to retirement accounts. The table above shows just how much is lost via a smoking habit. Imagine, for example, that you're in Michigan with a one-pack-a-day habit. That's costing you around $2,774 per year -- not that far from $3,000! And over 20 years, it's more than $55,000. It will likely be much more than that, though, as the price won't stay at $7.60 per pack, but will likely keep rising over time. Smoke two packs per day? You're looking at losses well above $100,000 over 20 years, enough to make a very meaningful difference to your financial security in retirement.

Image source: Pixabay.

 

It's even worse than that

 

As some ads say, "But wait -- there's more!" You're actually losing more than that $55,000 or $100,000-plus from our example above. That's because if you spend $3,000 per year on cigarettes instead of, say, retirement savings, you're not just giving up the $3,000 -- you're also giving up what it would have grown into over time. For example, if you were to invest $3,000 each year for 20 years, and it grew by an annual average of 10%, you'd end up with about $189,000. Two packs a day? $378,000! And remember -- in many states, it would be far more than that.

Meanwhile, know that the average Social Security retirement benefit was recently $1,348per month. If you're spending $3,000 per year on smokes, that's more than two months' worth of your Social Security income, up in smoke.

 

Nonsmokers can be hurt, too

 

Don't let yourself be smug if you're a nonsmoker. All of us routinely spend dollars in ways that don't serve us best. There's little harm in treating yourself to a fancy coffee now and then, but if you're spending $5 per day on a large coffee concoction, you're giving up as much as many smokers do. Think about your drinking habits, too. If you're spending $5 to $10 per day on beer, wine, scotch, or a relaxing margarita or two, you're losing out on substantial retirement savings just like smokers are.

Image source: Pixabay.

 

More costs to consider

 

Of course, smoking is costly in other ways, too. It's harmful to your health and is the leading causeof preventable deaths in the U.S. Those who smoke tend to live 10 feweryears than non-smokers -- so you're most likely literally losing years of life by smoking. Smoking is also costly to society. The Centers for Disease Control and Prevention notesthat tobacco use costs the United States more than $300 billion a year, including nearly $170 billion in direct medical care for adults and more than $156 billion in lost productivity.

Quitting smoking is notoriously hard but also extremely worthwhile, as it will likely have you gaining thousands (if not hundreds of thousands) of dollars and gaining years of life to enjoy, too -- years that are likely to feature better health. If you smoke, consider whether you want to double down on trying to quit. If you're a non-smoker, consider sharing this article with a smoker you care about -- and think about what costs of your own you might cut in order to turbocharge your very important retirement savings.

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Longtime Fool specialistSelena Maranjian, whom you can follow on Twitter, owns no shares of any company mentioned in this article.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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