Buying a car in retirement will be a different experience than buying your first car was when you were in a very different stage of your life. You have new considerations to include in your purchase decisions and different needs and priorities than before. When it comes to purchasing a car in retirement, keep in mind several important tips.
Pay in Full
Carrying auto loan debt is more ideal when you’re younger, so considering paying for the car in cash. Owning a car is expensive, and owing money on a car is even more expensive—something you should avoid as a retiree without the same security you had as a younger man or woman with a full-time salary.
When you pay in cash for a car, you pay less in the long run. By paying the entire sum up front, you avoid paying interest (sometimes amounting to thousands of dollars) on a loan. You can also get discounts by choosing to pay in cash. In some instances, you can even negotiate for a better price if you are buying a used car and paying in full.
When deciding to pay for a car in cash, think carefully about your budget and what you can afford. Do not overpay for a car that is more expensive than your retirement budget allows; that can get you into trouble later on.
Take From After Tax Accounts
Keep your taxes in mind when deciding how to pay for your new car. Spending a lot during your retirement can lead to higher tax bills, which you will want to avoid. Because a car is a big expense, when making the purchase you should take from your after-tax accounts such as a Roth IRA to avoid increasing your taxable income for the year. If you have both Roth and traditional IRA retirement plans, draw from your Roth plans first in order to avoid increasing your income and taxes.
Indulge a Little
If you’ve saved well, you likely have a sizable sum of money to spend on a car, so you should buy the car you’ve always wanted to drive. Upgrading your vehicle is one of those retirement splurges that are well worth it. This could be your forever vehicle, so it may be your last chance to get that car you love.
Consider looking at European options when considering what you want for your new ride. There are many luxury European car brands that will let you ride in style. Audi, BMW, Volvo and Mercedes-Benz vehicles make the list of luxury cars that are great for seniors.
Think of Long-Term Costs
When looking to buy a car in retirement, think of the long-term costs like insurance and repairs and not just the sticker price. Include those hidden costs in your budget and choose a vehicle accordingly.
After purchasing your car, you will have to consider taxes, licensing fees, fuel prices, maintenance, and any financing charges, along with your insurance expenses, and remember that some things, like fuel prices, fluctuate and can go up and down from year to year. If you forget these extra expenses when you calculate your car’s price, you could end up over-spending, which can cause problems for your retirement savings. Your new car will not amount to simply a one-time payment but will actually be costing you throughout your retirement; plan accordingly.
Find the Right Fit
For your retirement, you’ll want to find a car that is the right fit for you and provides you with plenty of comfort. As your retirement continues, your needs will change. You want to pick a car that will continue to address your needs and fit your lifestyle even as your retirement progresses. Look specifically at things like distance from the steering wheel when you are in the passenger seat, views from the side mirrors, seat height, and head restraint height. Think in terms of the future and ask yourself whether these elements will continue to suit you as you age.
What will be the point of having a car if it is no longer comfortable after a few years? Make sure the seat cushions offer good support and that you have the right amount of space. Having a car that fits you correctly will help you avoid accidents and injuries, and help you get where you need to go. If you can’t find a comfortable one in your price range, there are lots of different kinds of cushions that you can buy to put in your car to increase comfort.
Prioritize Easy Access
It may be tempting to go straight for the sport cars when you are picking your new car; however, remember that you need a vehicle that will be easy for you to access even as your body ages. Cars that are low to the ground may provide challenges when it comes to entering and exiting the vehicle, and this will only get worse as you age. Look for a more traditionally sized car with enough space, wide door openings, and low seats. When looking at different vehicles, practice getting in and out of the car several times to test its accessibility.
Focus on Reliability
Considering this may be your last car, make sure it is one that will be able to go the distance. If you end up with a car prone to breakdowns and needing repairs, you will regret it; dealing with frequent maintenance is frustrating and difficult for anyone, but handling these problems becomes even challenging for older drivers. Pick a car that you can trust to hold up over time and get you over long distances to see family, friends, and exciting sites. Choosing a long-lasting car will also help you save money.
Look For Safety
Keep an eye out for safety features when looking at cars. A backup camera can turn out to be your best friend when the time comes that you cannot move as easily to check the road behind you. A blind spot detection system can also be very helpful when it comes to alerting you of obstacles in your car’s way. As your flexibility decreases, you may end up relying more heavily on technology included in your car.
Buying a car in retirement can seem tricky, but if you follow these few, simple tips, you can end up with just the right car for you and a transaction that will benefit your retirement standard of living. Organize your priorities with a focus on your comfort and needs as you age, and keep in mind your taxes and financial situation. Then, enjoy your new vehicle!
No matter what age you are when you buy a vehicle, you should always have a good car insurance policy. View our auto insurance offerings here!