Living on Social Security can require sticking to a tight budget, but you also have to get around. If you’re still driving and not located in an area with reliable public transportation, you need a car.
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If you currently have an older car, you might be making costly repairs that are hard to justify. Even if you own it outright, constant trips to the mechanic can easily outweigh the benefit of not having to make car payments.
Of course, living on Social Security may not leave you with a lot of extra cash. As of January 2024, the average monthly Social Security retirement benefit was $1,907. This can make saving up for a new car feel daunting.
As of the third quarter of 2024, the average price of a new car was $47,542, compared with $27,177 for a used car, according to Edmunds.com. The average U.S. vehicle currently is currently 12.6 years old — the highest number in over a decade — according to the 2024 research by the Specialty Equipment Market Association (SEMA). This breaks down to an average of 14 years old for passenger cars and 11.9 years old for light trucks.
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Given this, buying a used car might be a good idea, which is exactly what Larry, from Los Angeles, did. A retiree living on Social Security and a monthly pension, he spent almost six months saving up for his new (used) car after his old one was in an accident. Ultimately, he chose a certified pre-owned 2023 Infiniti Q50 that he was able to buy in all cash, so he wouldn’t have to work monthly payments into his budget.
How To Save for a New Car While on Social Security
To afford his new car, Larry said he used a combination of his monthly pension, plus a lump sum he received from his auto insurance company after his old car was totaled.
Already living a modest lifestyle allowed him to keep his expenses to a minimum so he could focus on saving up for a new car as quickly as possible. He said any pension income not used for everyday expenses was then set aside for extraordinary expenses, such as a new car.
Generally speaking, he tries to keep at least six months’ worth of expenses on hand for emergencies or surprises. This financially responsible approach is clearly working for Larry, as he is the proud new owner of a one-year-old luxury vehicle purchased entirely in cash.
Clearly, you don’t have to have a huge income to afford a nice car. Instead, you can live a modest lifestyle largely on Social Security, like Larry, keeping your everyday expenses to a minimum.
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This article originally appeared on GOBankingRates.com: I Live on Social Security: Here’s How I Saved To Buy a Car
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