Financial Costs of Smoking: Insights Into Expenses and Long-Term Effects

Smoking shortens your lifespan, increases your insurance costs and can require costly treatments. Quitting smoking can help you build a healthy retirement lifestyle and better distribute your funds.

Smoking also presents life-threatening diseases, regularly causing cancer, heart disease, strokes, lung diseases and chronic obstructive pulmonary disease (COPD). According to the Pan American Health Organization, the life expectancy of smokers is at least 10 years less than nonsmokers.

Brian Clark, BSN, MSNA, Founder of United Medical Education spoke to RetireGuide about the potentially costly procedures that smokers could require. “Smokers may face various medical procedures due to the detrimental effects of smoking on their health.”

Clark provided a list of procedures smokers could face. While some screenings and surgeries can be covered by Medicare, coverage isn’t always guaranteed, or the service could only be partially covered.

“Smokers may also require ongoing medical management and monitoring to address the potential long-term consequences of smoking on their health,” Clark told RetireGuide.

If you smoke, you can expect higher premiums on health and life insurance.

For example, through the Health Insurance Marketplace, an insurer can charge 50% higher premiums for a person who smokes. The law on tobacco surcharges varies depending on the state you live in.

Linda Chavez, Founder & CEO of Seniors Life Insurance Finder, offered insight on how smoking affects life insurance premiums: “Life insurance premiums for smokers can be up to three to four times higher than nonsmokers. A 45-year-old looking for a 10-year term policy with $250,000 of coverage for someone who does smoke could expect to pay around $80 to $100 per month in premiums.”

“For someone who does not smoke, the estimate is roughly $20 to $30 per month. It’s important to note that these rates can vary based on other factors such as your age, health and lifestyle.”

However, when it comes to Medicare Advantage plans, the premium amount will not be readjusted for smokers. Medicare Advantage plans are not permitted to alter premiums based on the applicant’s smoking habits, according to the Kaiser Family Foundation.

While a habit that costs under $10 per cigarette pack seems affordable, smoking can cost more than $2,000 a year if you’re a regular smoker. According to the American Lung Association, the average daily smoker smokes 15 cigarettes a day.

15 cigarettes cost about $6 per day. The cost breakdown below is based off the average daily smoker.

A disposable e-cigarette isn’t much better. The average cost of a disposable e-cigarette is $20 a week, which is $84 a month or $1,008 a year.

There’s also the long-term financial impact to consider. Based off the information above, if you smoke regularly for 30 years, it will cost you around $64,800. These funds could have been better allocated to retirement savings plans and profitable investments.

States impose their own state taxes on cigarettes. The average state tax for cigarette is $1.91 per pack, according to the American Lung Association.

Missouri has the lowest state tax, at $0.17 per pack and New York has a high tax, at $4.35 per pack. Cigarettes can also be taxed locally at the city and council level, putting a bigger dent in your expenses.

The American Lung Association proposed an advocacy plan for 2023, urging states to increase tobacco taxes by $1.00 per pack to reduce tobacco use. Every 10% increase in cigarette prices reduces consumption by about 4% for adults and 7% among youth.

New York is following the proposed advocacy plan. Their 2024 enacted budget includes a $1.00 tax increase on a pack of cigarettes, putting it at $5.35, which is the highest and strongest cigarette tax in the country.

Smoking has severe economic consequences to the United States, costing billions of dollars of lost wages and worker productivity. Tobacco use costs the U.S. nearly $185 billion in lost productivity each year, according to the American Cancer Society.

Indirect financial loss linked to smoking isn’t limited to the United States. According to a study from the National Library of Medicine, Europe and China also discovered correlations between smoking and significant work productivity loss.

If smoking is causing you to be less productive, you’re less likely to outperform and climb your career ladder.

Smoking also has financial repercussions on your home and property. There’s a risk of fire damage to your home, which can cost up to $2,500 to $50,000 depending on the size and damage caused. Also consider the costs of cleaning and maintaining a smoke-damaged home or vehicle.

Instead of spending thousands on tobacco products, medical procedures and costly insurance premiums, consider quitting smoking and reallocating your funds to build a strong retirement plan. Quitting smoking also promotes healthy aging, therefore extending your lifespan and lowering the risk of contracting diseases commonly associated with smoking.

Note that quitting smoking doesn’t immediately fix your financial- and health-related problems. If you’ve been smoking for several years, you should still get a lung cancer screening and schedule regular checkups.

Your insurance premiums also don’t drop in price immediately. “Generally, you must quit smoking a minimum of one year before applying for life insurance in order for your premiums to be lowered. However, some carriers will provide discounted rates after six months of being tobacco-free,” Chavez told RetireGuide.

There are free hotlines available, support groups and medication available to help you quit smoking.

“There are several alternatives to help people quit smoking,” Clark told RetireGuide. “These include nicotine replacement therapy (NRT) products such as nicotine patches, gum, inhalers and nasal sprays.”

“Other options include prescription medications like bupropion and varenicline, as well as behavioral therapies, counseling, support groups and mobile apps specifically designed to aid smoking cessation.”

Linda Chavez
Founder & CEO of Seniors Life Insurance Finder
Brian Clark
BSN, MSNA, Founder of United Medical Education