Today’s retirees are living longer, which means their finances have to stretch further. Compounded with the rising costs in senior care and housing, it means making informed, careful decisions with each dollar is essential. Just because a retiree isn’t going to work doesn’t mean they don’t need in a car. In fact, the happiest retirees are those that stay active and social. If you are recently retired, here are a few tips on everything you need to know about buying a car.
It Begins with a Budget
As a retiree, major purchases aren’t the same as when you were working. You have to look at everything carefully, and make sure you don’t make such a big dent in your retirement funds that you’ll be cash strapped when you need it most. A car is considered a major purchase, which means you should research before taking the plunge. The most important thing to think about are the costs that come after the purchase. You’ll want to find a car that gives you maintenance, repair, fuel and insurance costs you can afford. It’s about the potential impact your car choice could have on your financial future. A good place to start is insurance.
It’s no secret that sports cars have high insurance rates, but did you also know that the older you get, the higher your car insurance will get? Seniors have aging issues that make them higher risk. When choosing a car, it’s essential to find something safe and reliable. As you write your budget, try to realistically estimate your total monthly costs for owning a car. Plus, look at all your expenses to see how much you can spend. Creating a good budget for retirement means doing things like:
- Add a section for essential items: This will include rent/mortgage payments, healthcare, food, etc. Use this worksheet for ideas of what to include.
- Add other items: Things you’d like to put on your budget, but that can go if necessary to save money or direct it to an essential item.
- Avoid budget killers: Be aware of things that can thwart your budget. This may include taking up a new, expensive hobby, or upgrading your home when it’s not necessary. Other items that do a lot of retirees in are providing financial support to adult children or parents that are still living.
- Keep on top of your budget: Staying within your budget is more important than ever as a retiree. Without regular income, what you see is what you get. Of course, you’re never too old to take on a part-time job or make money from home if you are capable or willing.
Financing a Vehicle as a Retiree
Applying for a loan will be the same as any other time in your life. The only change may be a bigger focus on your assets and on the retirement income you receive, such as social security or other retirement funds you stocked up. Retirees are not immune to bad credit, so if you are in a situation where you’re trying to repair credit at the same time, you may have to work with a lender who has more flexibility.
When deciding how much you can afford each month, look at cash flow, expenses, and look at the cost of credit. Consider buying used so you don’t deal with depreciation or higher insurance rates. You don’t have to get an old vehicle, there are excellent choices that have a lot of life left in them, especially with a good, regular maintenance schedule.
The Best Cars for Retirees
If you’ve chosen to purchase a used car, here are some top picks for retirees:
- Hyundai Azera – The Azera is a luxury vehicle without the typical luxury price tag. Not only does Hyundai offer an excellent warranty, they also load it with fantastic features.
- Kia Optima – The Kia Optima has a nice, roomy interior and lots of cargo space. It also boasts great mileage.
- Chevrolet Impala – For those who want a bit more power and a full-size sedan, the Impala is a great choice. With all the modern upgrades since its introduction, it’s a pro at maneuverability.
- Ford Fusion – If you want something economical and small, the Ford Fusion is ideal. With a nice selection of bells and whistles, the Fusion is perfect for tooling around town to do your errands, or to get you from point A to point B.
Helpful Car Features for Retirees
Cars have come a long way from 40-60 years ago. Take advantage of features that make driving that much easier as you get up there in years:
- Lumbar support
- Backup camera
- Navigation
- Lane alert system
- Large, digital displays
Buying a car in retirement takes a bit of research, but your new vehicle will be worth it.
