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.
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.
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.
“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.
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.
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.
Instead of spending your hard-earned retirement money on car, Lieberman suggested saving a bundle by looking into alternative transportation.
“Ride-share options are often cheaper than owning,” he said.