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Owning a car can be expensive, especially once you account for routine maintenance and repairs. But when you’re living on a retirement budget, you need to be prepared for those expenses. Otherwise, you could find yourself struggling to keep up financially.
Aside from typical auto-related expenses like gas, insurance and financing, there are specific car repairs that need to be in your long-term retirement budget. These are the big ones.
Mileage-Based Repairs
It’s recommended that you do some preventative maintenance and basic repairs on your vehicle, usually after a certain amount of miles — often around 5,000 for newer vehicles. Some tasks should be done every 30,000, 60,000 or 90,000 miles as well.
“Items like oil changes, tire rotations, and filter replacements should be done at regular intervals to keep the vehicle running smoothly,” said Neal Shah, founder of CEO of CareYaya. “Budgeting for these expected costs based on anticipated annual mileage is wise.”
According to AAA, the average person spends around 9.68 cents per mile on regular maintenance, repairs, and tires — a number that can rise significantly depending on the vehicle’s type, condition and age. Assuming the average cost, that’s about $1,300 a year you should be putting into your retirement budget.
Repairs for Basic Wear and Tear
Certain repairs are a little less routine, and potentially a little more expensive.
“Depending on the age and mileage of the vehicle, retirees may need to plan for big ticket fixes like timing belts, water pumps, suspension components, or exhaust systems,” said Shah. “Having a contingency fund for these less frequent but often pricey repairs is smart.”
You might need to budget a few thousand dollars for these types of auto repairs. For example, a timing belt replacement can cost anywhere from $400 to $1,000 in total, according to AutoZone. A suspension shock replacement can easily cost over $1,000 on its own.
Emergency Repairs
Although you can’t anticipate everything, you’re probably already aware that something is bound to happen to your car that requires repairs. It might not be right now, but it never hurts to be prepared.
“Even with proactive maintenance, surprise issues like battery failures, A/C compressor outages, or major engine/transmission troubles can crop up unexpectedly and take a big bite out of a fixed income,” said Shah. “Putting aside an annual car emergency fund of $500-$1,000 could provide an important safety net.”
If you own a more expensive vehicle, you might need to save more than that. Consider the condition and value of your car, and set aside as much as you’re comfortable with. Even if you end up saving more than you actually use, you’ll have some extra wiggle room in case something comes up later.
Fuel
“While not a ‘repair’ per se, budgeting for gas money is an essential piece of the puzzle, especially if the retiree anticipates taking frequent road trips to see family or go on adventures,” said Shah. “Projecting based on estimated annual mileage is key.”
The cost of fuel changes regularly. Right now, the national average cost of regular gasoline is around $3.66 per gallon. Other types of fuel — like mid-grade, premium and diesel — tend to be pricier.
Gas also costs more based on where you live. For example, it’s more expensive along the West Coast, but it’s cheaper in places like Florida, New Jersey, and New Hampshire.
Other Car Repairs
“There are regular repairs and maintenance that you can and should plan for, like brakes, oil, tires, and fluid changes,” said Melanie Musson, an automotive expert at AutoInsurance.org.
Besides these regular expenses, what else might you need to prepare for?
“You should also plan for your starter to go out at some point, and for your alternator, spark plugs, and radiator to need replacement or service,” she continued. “Your transmission may need to be rebuilt. But at that point, it may be better to buy a new-to-you car.”
Planning for the Unexpected Car Expenses
You can’t always account for everything, which is why it’s important to have an emergency fund for the unexpected. But how much should you set aside exactly?
“The older your car gets, the more you’ll have to budget for,” said Musson. “If your car is five years old, plan for $1,000 of unexpected extra expenses. Each year, budget for another $500. If you don’t use that money, save it for when you need it.”
Deciding When It’s Time To Buy a New Car
Aside from something major happening — like transmission failure — there may come a time when it’s simply not worth maintaining your current vehicle. But how do you know when it’s the right time to make a change?
Compare your current vehicle, and its associated costs, with that of getting a newer or different one.
“Retirees may want to consider whether it makes long-term financial sense to invest in a newer, more reliable vehicle with a warranty as they head into retirement, rather than sinking money into an aging vehicle that may have mounting repair costs,” said Shah. “Consulting a trusted mechanic about the 5-year outlook for their current ride could help guide that decision.”
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