Find Out How Your Dream Car Can Ruin Your Retirement Plans

Advisor September 15, 2019

People usually work really hard on their chosen careers, so they could live a comfortable life as well as provide for their families. Eventually, everyone has to retire and to be able to do that, one must be enough to continue living. There is social security which will eventually help everyone, but people still need to have enough money saved up, so they could live a comfortable life.

Unfortunately, only a small percentage of Americans are saving for retirement. Most of the reasons are because of debts that still need to be paid off. It was revealed on research that most Americans spend their money on their cars, that it is what stops them from saving money for retirement.

Not a lot of people know that Social Security is not enough to provide for them once they retire, hence a huge number of middle-aged Americans don’t bother saving up for it

Postponing Retirement For Your Car

Every single month, a huge number of Americans pay an average of $523 for a car payment and the average amount borrowed to get brand-new ride is around $31, 453. This leads to the question as to so many people spend so much to get a new and how exactly it would benefit them in the future. Financial experts believe that this is the cause of the FOMO phenomenon or the fear of missing out. It is pushing consumers to their limits that most of them don’t even care about long-term goals such as preparing for retirement.

In social media alone, people spend so much of their time checking out what other people are up to and what they are doing. Most of the time celebrities show off what a lavish lifestyle is like, and ordinary people view this as a goal. There is absolutely nothing wrong with getting your dream car, as long as it does not interfere with long-term goals that are way more important than a vehicle that may even lead you to bankruptcy.

Based on a recent research by Time, thousands of Americans plan to delay their retirement until after they are in their late 60s to early 70s

People who choose to get their dream cars often lead to having to postpone their retirement, not just because they don’t have enough savings yet, but because they are still paying for the car they got. If you think about it, an average household has at least two cars so each household already needs more than a thousand dollars every single month to pay for it. So that means more than $12,000 must be saved for the payment of two vehicles. This is just an approximate cost for an ordinary car, that could double if it is a luxury car such as a BMW or a Tesla.

To Delay Or Not Delay

A lot of people still can’t decide when they are planning to retire. Usually, it will depend on their health, age, lifestyle, and of course their savings. There are a lot of people who are ready retire, but they often find out that their savings are not quite ready for them yet. One of the most common reasons for it is because they did not both saving for their retirement at an early age, another would be because they are still in debt.

According to the American Association of Retired Persons, to be able to live comfortably after retirement, a person must have at least a million saved up or that your savings must be 10 times your current income

People who choose to retire early even if their savings are not enough, usually end up getting out of retirement to find a way to earn more money. The earliest you can claim your Social Security benefits is at the age of 62, but you will be given the opportunity to increase the Social Security monthly income if you retire later in life.

Although delaying retirement because of debt is something you must avoid, bear in mind that Social Security benefits are not enough to let you live comfortably. There is no such thing as being too early to save for retirement, but there is such thing as too late and it is something you wouldn’t want to do.