It has irritated me for many months that people decide they will smoke outside my office in the covered area to hide from the rain. I do hope this will stop from the 1st July when the new law comes in.
I recently went out to a pub and found that a packet of 20 cigarettes had risen in price to around £5.50. I could not believe it! In the good old days when I used to smoke, my woodbines (only joking) were only £1.25 a pack and you could usually get a fair few of those down your neck before choking on various carbonates.
I realise there may be some correlation between the ability to save for retirement and that of smoking. Although you will always be able to get enhanced annuity rates for being a smoker, if you decided to stop smoking from the 1st July you could be saving somewhere in the region of £5.50 every day for a 20-a-day smoker.
If you decide to take this initiative, a smoker could save a staggering £166.83 per month or £2,002 per year. And if you decided to fund this into a pension with basic rate tax relief, this would equate to a pension contribution of £2,566.66.
Projecting this forward for a 40 year old male (as an example) to the age of 65, this could generate a pension fund of £146,000 (assuming middle rates). Sadly, you would not be entitled to an enhanced annuity rate for being a smoker, but you would have achieved an enormous fund in comparison to deciding to burn it outside my office while avoiding the rain!
So, to summarise, I hope the people who are stood outside my office decide to take heed of the new legislation and to stop smoking.
If they do, hopefully I can give them a business card beforehand and in doing so they will be able to save for their retirement. And at the age of 60 with a fund of that size, we could even consider a drawdown arrangement (just) in comparison to annuity purchase to provide for their retirement.
What an excellent way of bridging the savings gap! The final advantage is that they might also live longer!
Keith Churchouse is director of Churchouse Financial Planning.
The views expressed are those of the author and not those of the company he represents.IFAonline
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