Retirement is a time of big changes – moving homes, taking vacations, and for some, deciding whether or not to buy a car. While the idea of cruising into the golden years in a shiny new vehicle might be tempting, there are several reasons purchasing a car in retirement might not be the best financial move.
Reduced Need for Transportation
Scott Lieberman, founder of Touchdown Money, said retirees often have less need for multiple vehicles. „If you’re retired, there’s a good chance that you won’t need an additional vehicle during your golden years,“ he said. With no daily commute and fewer obligations, one car per household is often sufficient.
Financial Constraints
Many retirees live on fixed incomes, making large purchases like cars challenging. Chris Pyle, a JustAnswer Auto Expert, said, „Most retired workers are just barely getting by on SS and some savings, maybe even an IRA, and 401(k).“ A new car payment could strain an already tight budget.
High Cost of New Vehicles
It’s a bad time to buy cars anyway, and new cars are often quite expensive even in good times,“ Lieberman said. „The cost usually isn’t worth it.“ With car prices at record highs, the investment might not make financial sense for retirees — add in higher insurance premiums for older drivers, and it might not be the best move.
Health Considerations
Pyle said health can be a factor in car ownership: „Their reflexes and eyesight are not good enough to drive. Their body is fragile and it is hard to get in/out of the vehicle.“ As we age, driving can become more challenging and even dangerous.
Prioritizing Essential Expenses
Retirees need to prioritize their essential needs before considering a car purchase. „Food, a roof, utilities, and medicine are more important than a car, a loan, upkeep, and insurance,“ Pyle said.
Alternative Transportation Options
Instead of spending your hard-earned retirement money on a car, Lieberman suggested saving a bundle by looking into alternative transportation. „Ride-share options are often cheaper than owning,“ he said. With services such as Uber and Lyft, as well as great public transportation in many areas, it can pay to say no to a car. Plus, if you use ride share and public transport, it’s a more eco-friendly choice.
Potential for Unused Asset
If health issues arise or driving becomes difficult, a newly purchased car could end up sitting in your garage, unused. That said, both experts acknowledge that the decision to buy a car in retirement isn’t one-size-fits-all. „The answer to this question all depends on the person, where they live, their health, and their finances,“ Pyle said. „If a retired person can afford it, [if] they need it, [if] they want it, then by all means purchase a car as needed. You have earned the right to make a purchase that lets you keep some freedom of getting out of the house.“
In conclusion, while the idea of buying a car in retirement may seem appealing, there are several factors to consider before making such a significant financial decision. From reduced need for transportation to health considerations and alternative transportation options, retirees should weigh their options carefully before heading to the dealership. Ultimately, the decision to purchase a car in retirement should be based on individual circumstances, needs, and financial capabilities.