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.
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GOBankingRates spoke to experts in the automotive and financial fields to weigh in on why retirees should think twice before heading to the dealership.
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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.
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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 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.”
Lieberman suggested that for many retirees one car might be a better choice than two: “When you have two incomes, you usually have to have two cars to get everyone where they need to go. In retirement, you can often carpool and save on the extra expense.”
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This article originally appeared on GOBankingRates.com: 7 Reasons You Should Not Buy a Car When You Retire
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