New incentive to help quit smoking could make you a millionaire

Many people are already aware of the financial costs of maintaining a smoking habit; cigarette prices continue to rise in an attempt by the government to cease the nations smoking habit, alongside other attempts to cease the UK’s smoking culture.

A new incentive could have arrived from finance and investment author Paul Claireaux, who has provided a case study that shows quitting cigarettes and investing the money elsewhere could make you a small fortune.

Should a smoker choose to quit while they are still young (a 20-year-old was used as an example in the study) and invest the typical cost of a packet of cigarettes (£7.60) into a work-based pension fund every day, their pension at their retirement could be huge; £530,000 by the age of 55 or £935,865 by the age of 65.

This projection uses a basic rate tax payer as an example, thus they would receive 20% income tax relief on top of their pension. This means a higher rate tax payer could receive even more.

The study also assumes the employee has access to a defined-contribution pension, which would involve the company paying 60% or more on matched basis earnings. This kind of scheme is available across some companies, but usually not to all members of staff.

If you do not already smoke, there are other ways to get involved with this initiative. Calculating the cost of a daily coffee, weekend take away or other such frivolities could then be invested within a pension.

Mr Claireux has said: “Many employers are more generous than these basic auto-enrolment schemes. In which case, employees will be able to build some wonderful pension funds.

“Some employers who are not already offering good DC pension schemes may restrict their pension input to the bare minimum of 3% and some will take advantage of the staged introduction of auto-enrolment – keeping their contributions to a minimum until obliged to pay more.”

This means even reducing the amount smoked per day – from switching from a 20 pack to a 10 pack – the savings can still be significant. They may be half of the above projection, but it’s still a huge saving that will correlate with many work pension schemes.

Created by ECigarette Direct