As Boomers retire, they will need to add transportation costs to the price of aging in suburbia. Many plan to rebalance their expenses and cut back on shopping, vacations, and credit card debt. They look forward to a time when they no longer have a car payment. But, have they thought through the full costs of transportation as they age? Most often, transportation costs are not in the forefront of retirement planning.
There is an irony here, since the cost of transportation was probably a major consideration when they purchased the home they live in today. Transport is a source of financial stress when people live far from activities or have long commutes. In the outer suburbs, the cost of housing is less, but commuters “pay” for it with their time, and, of course, gas station fill-ups, and vehicle wear and tear. The Center for Neighborhood Technology in Washington, D.C. has as an makes Housing plus Transportation (H+ T) costs explicit with their online calculator.
H+T (is not HOT). IT IS SUBTLE
For Baby Boomers on the verge of retirement, the “H+ T” equation is subtle. If people age-in-place, what will be the true financial cost of transportation? It will vary, of course, on how much they need to travel, how often, and what type of vehicle will keep them secure.
At face value, the transportation costs are vehicle expenses. The AAA estimates a monthly cost of about $725.00 for a sedan driven 15,000 miles annually but the Bureau of Labor Statistics (see graph above) estimates less. Fuel costs have been keeping that figure low but insurance, registration fees, depreciation, and maintenance have been increasing. For the average Boomer household in suburbia with 2 vehicles the annual cost would be around $10,000, assuming each car is driven under 15,000 miles. If they have a third vehicle (not uncommon), say a spare car or camper, annual cost rises an additional $3,000 to $4,000 (assuming the third vehicle is driven less). As Boomers age, their insurance premiums will inch up. Although they will drive shorter distances, they pose a somewhat higher risk (but far below the risk of a novice 16 or 18 year old driver).
Transportation costs continue: As people get older but choose to age-in-place, they may also depend more on taxis or share-car services, like Uber. Getting home at night, when it is difficult to drive in the dark, getting to and from the airport, or going to certain doctor’s appointments, are cases where a third party, like Uber, serves a growing market.
THINKING FLEET
Holding on to the household fleet, and supplementing it with Uber, is a viable solution- as long as Boomers remain in good health and can drive safely. But, financially, the multi-car household is still an expensive solution. At some point, the Boomers will start downsizing their fleet. They may also find that they can help out their neighbors (if they know them) by offering a ride here and there, and taking scenic day trips on trains or buses, instead of driving solo.
THINKING ANEW
But Boomers will need, and want, newer cars. Automotive technology is changing. New vehicles, and ones still to reach the market, have been dubbed “smartphones on wheels.” A “smartphone on wheels” has electronics that tie together, mirrors, cameras, and sensors. They are more comfortable to sit in, and provide better seating and visibility. Most of all, these electronic vehicles help drivers of all ages avoid collisions.
The Boomers were the first generation, largely because of women’s participation in the workforce and suburban development, to require two or three car households. There were personal benefits to this “cartopia.” Now, as the Baby Boomers wind down their careers there will be reasons to scale-back. That is, unless they choose to live in a larger camper and move it from place to place. But, the main reason is that retirement needs to be affordable, and keeping an extra car has extra cost. But, almost all Boomers will need newer cars, cars that are better suited to their aging years. That can only add new loans, or leases, and add transportation costs to the price of aging in suburbia.