Are Vehicle Costs Blocking the Road to Retirement?
Logically, investing tens of thousands of dollars toward retirement may make more sense than adding an equivalent amount of consumer debt here and now. Practically, though, we need a good car or truck, and emotionally, we get a kick out of driving something new. So, we buy (and often finance) new vehicles.
While a car or truck can possibly help you make money, autos almost always depreciate. Factor in financing, licensing, repairs, and fuel, and the costs can add up. A five-year auto loan on a new car or truck in the $50,000-$70,000 price range could mean a monthly payment of anywhere from $800 to $1,300, depending on what you put down.
If you can buy a new or used vehicle with a price tag of about $20,000, the difference in monthly payments could give you more money to put toward retirement.
Sharing Retirement with a Roommate
According to the Harvard University Joint Center for Housing Studies, more than 40% of Americans age 65 or older live by themselves. Retirees value independence. At the same time, living solo can mean shouldering the cost of living alone.
Some retirees choose to live with roommates. The math makes a compelling argument: Multiple sources of income, such as Social Security benefits, can be put toward housing, food, and other expenses, effectively making daily life more affordable.
How do you vet potential roommates? You might be wise to consider only friends or people from your social circle. A roommate agreement is also a good idea. These can be found online, and they can help each roommate to both set and respect boundaries, personal and financial. A roommate agreement can also help determine the nature of rent payments—e.g., automated or not.
Both roommates can try the arrangement for a month and see if they like it; if not, then it need not go further.
On the Bright Side
Could you have more retirement assets than you assume, held in retirement accounts sponsored by long-ago employers? A small percentage of Gen Xers and baby boomers do. You may want to visit unclaimed.org, the website of the National Association of Unclaimed Property Administrators, or simply call or email former employers to check on this possibility.
Securities offered through Cambridge Investment Research, Inc. a Broker/Dealer, member FINRA/SIPC. Cambridge Investment Research Advisors, Inc., a Registered Investment Adviser. Lighthouse Financial, LLC and Cambridge are not affiliated.
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1. MarketWatch, September 26, 2020
2. Walla Walla Union-Bulletin, September 27, 2020
3. U.S. News, September 25, 2020