What % of Net Worth on a Boat

[REWahoo]

I just see things as - if I need X in investments to support my retirement withdrawals, and I have X+Y, then I can tap into Y for toys or other spending if I like without endangering my retirement.

+1

That's exactly how I saw it when we purchased a Class A motorhome the year after we retired. I never thought of it in terms of what % of our net worth we spent on it, but looking back it turns out it was around 5%.

 

[Gumby]

I don't think I could bring myself to spend 5% of our net worth on any one thing.

 

[REWahoo]

Agreed. I doubt I could bring myself to spend 5% of your net worth on any one thing either.

 

[Midpack]

I don't think I could bring myself to spend 5% of our net worth on any one thing.

With a boat, you can get a big chunk back on resale FWIW, but I don’t disagree. We were boating fanatics and our last boat was much less than 5% of NW.

 

[Kroeran]

I grew up around river/lake boats that we kept pulled up in the beach in the summer and moved into the cottage garage over the winter. They were used for years maybe decades, and waterfront property without a boat is a sin.

Down here in Florida is an entire different story. My friend with a boat pays for racking, which is a whole different thing. Even if you go out every week, and if you include depreciation on a used boat, it’s hundreds of dollars a trip.

A used boat on a trailer that fits in your garage is a different matter.

Renting is a fraction, and friends can split the cost. You can set off from different locations.

Other friends that are full timers like the boat club. There is an initiation fee

There are apps now to rent from owners like how Turo
works

 

[papaof2]

First get a firm grasp of the description "A boat is a hole in the water into which you pour money". Then determine what the yearly expenses would be on a boat the size you want: insurance, maintenance, docking fees, fuel costs (assume fuel goes up at least 10%/year), cost of replacing equipment (generator, VHF radio, compass, GPS, fridge, etc).

Divide that by the number of hours you would actually USE the boat (probably less than half of what you're thinking). Then decide if the pleasure of the boat is worth that many $$$/hour.

Typically, the two happiest days in a boat owner's life are the day he buys the boat and the day he sells it.

 

[Rambler]

A boat owner is guaranteed at least two happy days...the day he buys it, and the day he sells it...according to a friend of mine who owns one.

DW wanted to get a PWC. I thought I’d love to have one as well, but, I know we might get just one or two uses out of it per year. DW and I discussed it and decided we’d rent one whenever we got the itch to go for a ride. Venture a guess how many times we’ve actually done that?

Zero...just not as interested as we thought.

 

[NW-Bound]

I just see things as - if I need X in investments to support my retirement withdrawals, and I have X+Y, then I can tap into Y for toys or other spending if I like without endangering my retirement.

Hmmm....

My WR for last year was 1.5%. Using the above logic, I can spend down my stash so that the same amount of expenses becomes 4% of the remaining money. Lemme do a bit of calculations here.

It turns out that I can spend 62.5% of my investable accounts, and live on 4% of the remaining 37.5%.

Wow! I can buy something really big and expensive. That's a lot more than 2x the current values of my homes together.

But here's a problem. Something that big will take a lot for upkeep and maintenance. I will have new expenses, and my WR will be a lot higher than the targeted 4% of remaining funds.

Even as a thought experiment, it brings some complications.

 

[audreyh1]

My wife and I have a dream if buying a Class A motorhome when we retire and full time in it for a while. In fact we’re seriously considering buying a Class B camper van in the immediate future to be able to part time in it for some road trips.

We will be having the same consideration regarding how much as a percentage of net worth would be reasonable to buy the RV which similar to a boat is a depreciating large ticket item with upkeep costs. We’ll probably sell our home which will help free up additional money but eventually we will need a place to buy again.

I’m not sure what percentage we’ll feel comfortable spending when the time comes. The good news is that we can plan for this and I will run our retire numbers based on what’s left after buying the RV. Plus, if we end up spending the money on the Class B now we’ll at least have something to trade in possibly.

Like the boat purchase buying an RV comes down to how much you think you’ll use it verses the opportunity cost. I’m hoping we won’t go over say 5% of whatever our net worth is at the time to buy the RV. We can also push retirement out a little further than the earliest possible point to allow for extra funds to cover this major cost.

Good luck. I don’t think there is a rule of thumb. Be sure buying the boat will not put you in a financial hardship. If all else fails you could sell it after owning it for a while. At least you will have that time to enjoy it.

We had ample funds. We bought a nice motorhome. We lived in it and travelled for 5 years. We sold the house and put that money aside towards the next house. That was in early 2005. The funds we pulled from our retirement investments had already recovered a few months later making our heads spin.

Of course it doesn’t always work out that way.

 

[Big_Hitter]

if it flies or floats, don't buy it

 

[ncbill]

I like the club idea...for boats, planes, etc.

My kid joined his college aviation club...going gliding for the first time this weekend.

He also plans to get add'l certifications on club aircraft...cheaper than renting from a local flight school.

 

[ShokWaveRider]

It is subjective, we had a big (for us) Cruising Cat (45') in the early 2000's, it represented about 35% of our net worth at the time. We lived on it for a couple of seasons while cruising the Caribbean seas. Did we lose money on it, absolutely, can we replace those experiences, not ever.

 

[2177V]

I have just retired (54) and am spending 51% of my time in Florida. I am thinking about getting a boat (stinkpot) to run around in with the family. Does anybody have a point of view about what % of your Net Worth you use to calculate how much you will spend on a "toy".

PS Interesting article I just found for cars https://www.financialsamurai.com/net-worth-rule-for-car-buying-guideline/

When I was 55, I purchased a used 12 years old 1993 Bayliner Cuddy boat in 2005 for $6K. A new boat was $20K but I work on cars so working on a boat was not a big deal. One of the best decision I EVER made. I now have 15 years of PURE JOY owning this toy.

This was 6% of my annual salary and less than 1% of my net worth. The boat was a better "toy" than my Corvette which cost three times as much. I told my friends and Family that I rather sell my Corvette than my Boat. This actually happened!

The 20 ft boat had a small sleeping cabin in the bow with a potty toilet. I would fish for three days and two nights on the water regularly during my retirement. During a day trip with friends, visiting kids love my cabin and they love to water ski as well.

Buy the boat! It is just like buying a second car! If you can afford two cars, then you can afford to have 1 SUV and 1 boat. If you are a DIY'er who works on cars, then you can save a lot of money maintaining the boat. If you are not a DIY'er, then the repair costs are generally "twice" as much as owning that second car.

My best advice: Buy a used boat from a boat owner living a middle class or upper class area and is moving up in size. A good boat owner takes care of their boat and the owner then decided it was too small. There is a saying among boaters that after you buy your first boat, the first thing you want to do is buy a bigger boat.

 

[RobbieB]

I agree, buy used.

I'm getting excited about boat number 5 coming soon!

 

[GreenEggs]

When shopping for a pontoon boat (actually a tritoon) this past Summer I initially shopped used, but couldn't find a decent deal on what I wanted. So, I started looking at new ones. (I didn't like the idea of paying more for it than I had for my car, but after shopping I realized that it wouldn't depreciate as quickly as the car, which helped me swallow the cost of it.)
It took a little while to learn the brands. But we eventually were sold on an Avalon. We really liked the one at a local dealer, but were hesitant because of his pricing on upgrading the engine from a 150 to a 200 hp. I called a buddy in B'ham and told him that we'd been shopping and had really liked the Avalon & he said "That's funny I just saw a TV ad that the local Avalon dealer here is having a big sale." So I gave the dealer a call and ended up saving $6K and getting a 225 Honda over the 200 Suzuki, which was added bonus in my mind.
For some reason, the boat dealers on Lake Norman seem to price gouge. So, if you happen to end up shopping new be sure to call around to different dealerships in other locations. $6K covers a lot of beer & gas!

 

[dm]

I am also going to buy a boat in the near future. We are looking at buying a home on a canal at the moment so we can put the boat on a lift in the backyard.

I also own a plane. But it’s for sale at the moment. My wife got scared on a trip from Chicago to SW Florida when I had a mechanical issue. Nothing life threatening, just a hole in the exhaust. But she has always been a nervous flyer and it upset her.

I can rent a plane, but not like I have. The rentals are generally either trainers, or very expensive. So when the plane is sold my flying days are probably over.

I could also rent a boat, but the clubs here don’t have anything I would feel comfortable in 60 miles offshore. And I have friends with boats, but that means i have to be on their schedule.

I’m going to use the plane money for a used boat, I can’t imagine that boat ownership is more than a boat. I’ve owned them in the past and at least I can do some of my own maintenance.

 

[Midpack]

I like the club idea...for boats, planes, etc.

My kid joined his college aviation club...going gliding for the first time this weekend.

He also plans to get add'l certifications on club aircraft...cheaper than renting from a local flight school.

Re: boat clubs. We thought we would too, but costs vary considerably. A local municipal community program or YMCA program can be incredibly cheap. We joined a sail-kayak-SUP program that’s $550 per year, open 365 days a year. The equipment is well worn but serviceable, they have youth and adult lessons, and they have lots of social programs on and off the water - it’s great!

OTOH, we looked into a nearby Freedom Boat Club. The equipment is much nicer first off. But they don’t even prices (red flag) and they recruit like a time share. I don’t have actual numbers since they won’t say, but the monthly cost is kinda high AND there’s a substantial upfront buy in on top of that. From word of mouth the one near us is $2400/year with a $5000 buy in - way more than I’d pay. The initiation fee is not refundable, but you might be able to sell it and get some money back, and the new member pays Freedom a transfer fee? YMMV

Depending on the membership level and the location you choose, the costs of a Freedom Boat Club membership can range anywhere from $199 to $399 per month [$2400-4800 per year], with a one-time initial membership fee that can be in the $3,000 to $10,500+ range, again, depending on the location. The weekday-only plans are often about $200 per month, while the weekday and weekend plans will be more, often around $400 per month.

https://www.howmuchisit.org/freedom-boat-club-cost/

 

[kcowan]

<snip>
Years ago a friend with a 35 foot SeaRay power boat they used once a week, was out on the boat with his wife one day - and came to the realization each outing was costing them $500/outing. He asked his wife if she thought it was worth that, or were there better ways to spend $500/week? They sold the boat after that season and never looked back. And those costs were more than 20 years ago...

In 2003, the father of the bride held the rehearsal dinner on his 41 foot Searay that he kept at The Sarasota Marina. He was a successful executive from the Midwest and he was aware of costs. He said his captain used the boat much more than he did and had the hull cleaned once a week.

He relayed that they were going to Venice Beach for Sunday brunch in the boat and that it would cost $250 in gas. He said driving would have been faster and taken half as much time and $20 in gas.

No you do not cost justify a boat! Justify like your liquor budget. An annual expense that goes down the drain.

 

[Midpack]

In 2003, the father of the bride held the rehearsal dinner on his 41 foot Searay that he kept at The Sarasota Marina. He was a successful executive from the Midwest and he was aware of costs. He said his captain used the boat much more than he did and had the hull cleaned once a week.

He relayed that they were going to Venice Beach for Sunday brunch in the boat and that it would cost $250 in gas. He said driving would have been faster and taken half as much time and $20 in gas.

No you do not cost justify a boat! Justify like your liquor budget. An annual expense that goes down the drain.

Agreed. When we looked at annual cost we could live with it, and did for 25 years. But when I did a cocktail napkin calc of the grand total we spent over the 25 years of boat ownership, it’s breathtaking. We would have reached FI 5 years earlier without boating - something to consider. We now spend about 5% of our former expense, have access to boats 365 days/year - and honestly it’s just as much fun.

 

[thepalmersinking]

You worked hard your entire life to FIRE. Now is time to enjoy all those years of sacrifice.

If this is a financial discussion then there is never a financial reason to own a boat.

You can’t take it with you....

 

[FI_RElater]

In 2003, the father of the bride held the rehearsal dinner on his 41 foot Searay that he kept at The Sarasota Marina. He was a successful executive from the Midwest and he was aware of costs. He said his captain used the boat much more than he did and had the hull cleaned once a week.

He relayed that they were going to Venice Beach for Sunday brunch in the boat and that it would cost $250 in gas. He said driving would have been faster and taken half as much time and $20 in gas.

No you do not cost justify a boat![/U] Justify like your liquor budget. An annual expense that goes down the drain.[/U]

....or you could set up to pay for it with a "sinking fund"

https://www.investopedia.com/terms/s/sinkingfund.asp

 

[klondike8]

If you went to Annapolis and spent good part of your life in USN, you probably got tired of any boat.

I don't think I could bring myself to spend 5% of our net worth on any one thing.

 

[Rowej]

We live in Florida, not retired yet, have a boat and live on the water. We are not retired yet, and know that owning it adds to our time working. Beginning to look for the next much larger boat to spouse during retirement in about 7 years.

We love to be able to run over to the Bahamas a few times a year on short notice. If the seas are nice, we can take a 3 hour run and get away for four or five days, as a mini vacation. Sure, we could jump on a plane cheaper and be there in a 25 minute flight, but the experience is not the same as saying, the seas are calm, do you want to run to the Bahamas this morning.

You can't do that with a Boat Club. The next boat will allow us to sleep on for a week or so at a time and stay at a marina or swing from the hook over there. Our best experiences either alone or with friends are on the boat, and can't replace that with money,

I am also going to buy a boat in the near future. We are looking at buying a home on a canal at the moment so we can put the boat on a lift in the backyard.

I also own a plane. But it’s for sale at the moment. My wife got scared on a trip from Chicago to SW Florida when I had a mechanical issue. Nothing life threatening, just a hole in the exhaust. But she has always been a nervous flyer and it upset her.

I can rent a plane, but not like I have. The rentals are generally either trainers, or very expensive. So when the plane is sold my flying days are probably over.

I could also rent a boat, but the clubs here don’t have anything I would feel comfortable in 60 miles offshore. And I have friends with boats, but that means i have to be on their schedule.

I’m going to use the plane money for a used boat, I can’t imagine that boat ownership is more than a boat. I’ve owned them in the past and at least I can do some of my own maintenance.

 

[teejayevans]

if it flies or floats, don't buy it

And you’ve own how many boats and planes to make that definitive statement?

 

[Gumby]

If you went to Annapolis and spent good part of your life in USN, you probably got tired of any boat.

Yeah, when you get to drive a 380 foot boat with an engine that puts out 30,000 horsepower, you're kind of ruined for a Boston Whaler.