Many people nearing retirement have envisioned buying their dream car. Cars are an essential part of living in our modern society. While some people use cars as a status symbol, others use it to get them from point A to point B.
The years we are working, we may save our dollars to pay cash for a car, or we may finance it and use our income to pay off the loan. Once we retire and live off our savings, that buying power may change.
Buying a car in retirement doesn’t have to put a strain on your finances. Knowing your options will allow you to determine the best way to purchase your dream car.
Defining what's important in your retirement
Knowing what is important to you when you retire, allows you to prioritize your goals and budget. Understanding that unless your dream car is a vintage or rare vehicle, it will probably depreciate over time. So, when you buy your car, you’re buying it for your own personal enjoyment. This doesn’t mean to go and purchase a vintage or rare vehicle because 1. that’s not everyone’s dream, and 2. it may not fit into your retirement budget.
It is still possible to find a dream car that fits within your budget and can make you happy. Viewing your car purchase as a depreciating asset, and not an investment is a good start when setting goals to buy your dream car.
Setting the goals
Setting goals isn’t just for the workplace. When purchasing your dream car in retirement, setting goals can be similar to buying your first home or figuring out what you need to retire comfortably. You have to sit down and figure out a plan to keep you on track to achieving your dream car. When setting goals, here are some questions to think about.
- How much can you afford?
- When it’s time to purchase of your next vehicle, you’ll need to know your current car’s trade in value?
- How much will it cost you to get your vehicle serviced?
- How will you find your goal? Monthly payments, cash, or a combination?
- What are the tax implications if you withdraw extra retirement funds for a car purchase?
- Will you buy a car that appreciates or depreciates?
- How long do you plan to keep the car?
- Will a car purchase be a recurring goal?
Plan and expand
Once you’ve identified goals to set for yourself, you can begin to plan them and expand on how you want to reach them. Most people have heard advice about setting goals, but still gets stuck with knowing which goals get top priority. When taking a goals based planning approach, it’s important to not only identify your goals but also to rank your goals in order of importance, apply a timeframe and to be flexible if things don’t go according to plan.
Retirement doesn’t mean you have to retire from life. Buying a car in retirement can be an emotional decision, but with careful consideration to your changing needs, you’ll be able to drive into retirement successfully. It requires motivation and conviction to make it happen, just stay focused and you’ll be on your way to driving your dream car when you retire.
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