Charlie_Boy
Dryer sheet aficionado
- Joined
- Jan 6, 2007
- Messages
- 43
You mentioned you are moving to Colorado for retirement. Note that Colorado charges an ownership tax along with the license fee. Info here: Fees and Sales Tax
I am planning to retire next year. Just like most Americans, despite my relative frugality, due to the fact that we live in a town where there is no public transit, plus we have awful winter weather, we ended up having
three vehicles. Fortunately for us, they are all fully paid.
What is the thought of the group with regards to "fully paid" vehicles.?
Should we just keep them until the wheels fall off? Is there a financial benefit is keeping one and trading the two left to a newer one, thus downsizing to 2 newer ones.
The vehicles are:
1. Ford F150 Supercrew 4x4 truck -4000miles only
2. Honda Accord Coupe v6 - 15,000 miles.
3. Nissan Altima v6- 23,000 miles.
1. 2003 Chevy Impala, 6 cyl automatic, 160K miles...
We will run the Honda into the ground so we can keep the mileage low on the Jeep and Impala.
That's from Mr B's pre-Freebird era, the dark ages so to speak.Uh, it looks like you may have already missed the boat on the Chevy...
I think it is similar to the 'pay off the mortgage prior to retirement' strategy - you'll need less income in retirement if you aren't paying car notes. Less income also means lower income taxes in many cases.I'm a bit mystified by the emphasis by OP and a number of subsequent posters on the vehicles being "paid for." Assuming you can afford to have "extra" vehicles, does it really matter all that much whether you withdrew the money to pay for them up front and they are "paid for" or if you are withdrawing the money slowly over time.
I think it is similar to the 'pay off the mortgage prior to retirement' strategy - you'll need less income in retirement if you aren't paying car notes. Less income also means lower income taxes in many cases.
I'm a bit mystified by the emphasis by OP and a number of subsequent posters on the vehicles being "paid for." Assuming you can afford to have "extra" vehicles, does it really matter all that much whether you withdrew the money to pay for them up front and they are "paid for" or if you are withdrawing the money slowly over time.
I understand that in the second scenario you're paying interest. But in today's low interest environment, that might not be such a big deal. Does the paid-off or not paid-off status of the vehicles really matter to the decision?
I don't think that's true in retirement.
Say I have a one million bux FIRE portfolio. I buy a car and withdraw $30k to pay for it and now have a $970k FIRE portfolio and a "paid for" car. Or...... I pay on time and withdraw $10k/yr + interest for 3 years to pay for it. Other than the interest, what's the difference. Income needs aren't involved.
True, but the OP isn't retired yet.
The way I read it, he was pointing out he won't have to withdraw funds from his retirement portfolio to make car payments if he keeps them after retiring, so that shouldn't enter into the keep/sell decision.
To me it does. I view paying any amount of interest as a waste of money in today's environment where the only guaranteed returns on investments are less than 2%.
I understand. Still, it seems like the "paid for" or not situation inappropriately bears on these decisions with many folks.
Here is a good example, although it's about a mortgage:
A close friend just finished building his retirement dream house. He's 64 and his DW is 69, yet they took on a 4% 30 year mortgage. Why? Certainly not because they can't afford the beautiful new home. It's because their savings are primarily in deferred accounts and withdrawing $200k (the difference between their old home and this one) from a TIRA in one year would have triggered high taxes. (The withdrawal would have been on top of hefty pensions.) So they'll pay off the mortgage at a pace determined by how much they can withdraw annually without triggering the tax bracket they're trying to avoid, the elimination of certain deductions and higher Medicare premiums.
I agree with your mortgage example, but I see the situation a little differently with the OP's car situation.
The OP apparently didn't use money from his retirement nest egg to purchase the three vehicles, nor does it appear they were purchased in preparation for retirement. The three vehicles are part of OP's current lifestyle. He's planning on retiring next year and he is wondering whether or not to keep all three vehicles in retirement. Their 'paid for' status does have a bearing on the decision, at least to my way of thinking.
And just for the record, I don't like annuities...
Punt...