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Old 09-17-2017, 09:39 AM
 
Location: Washington State
18,610 posts, read 9,618,463 times
Reputation: 15842

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Quote:
Originally Posted by TuborgP View Post
Wrong question to mostly the wrong audience. Because of pensions, SS. You are living on fixed income. Your wealth isn't as important as many retirees. Your question is probably more in line with what percentage of monthly income would a person spend on a car. That of course depends on your current cash flow and debt to income.,
Yup, I have learned that though interesting to get perspectives, it's essentially worthless to get opinions from people that have a completely different mentality and in vastly different situations. My income is far from fixed, I have several houses and apartments that I rent out and that generates a highly variable income. BTW, I'm still working (in Kuwait) and trying to retire in the next few months. I've made an offer on the car, so we'll see.
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Old 09-17-2017, 02:04 PM
 
Location: Texas
1,972 posts, read 1,377,839 times
Reputation: 6755
Quote:
Originally Posted by Tall Traveler View Post
Yup, I have learned that though interesting to get perspectives, it's essentially worthless to get opinions from people that have a completely different mentality and in vastly different situations. My income is far from fixed, I have several houses and apartments that I rent out and that generates a highly variable income. BTW, I'm still working (in Kuwait) and trying to retire in the next few months. I've made an offer on the car, so we'll see.
Well you are on a retirement forum with people of diverse means and period of life. Some see a car as only a necessity and a depreciating asset. Others as something fun and exciting. I believe most have told you to buy what you want and like, some looked at the financial aspect and questioned the logic.

You are still working, thus must be much younger than many of us, and have far more options. My wife and I have been retired for over 20 years and we still love nice fast cars. On the other hand, I would not want to pay over $100K for a car at my age. However, being as young as you are and have the means, why not. Are you going to tell us what car you want to buy?
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Old 09-17-2017, 08:26 PM
 
Location: California
4,556 posts, read 5,477,908 times
Reputation: 9623
I plan to spend it down before the relatives get their hands on my hard work, so I buy what I like.

Remember that old bumper sticker that said: " I'm spending my kid's inheritance"? Works for me.
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Old 09-17-2017, 10:12 PM
 
611 posts, read 368,605 times
Reputation: 2032
I think you are looking at it the wrong way.
If you are planning to retire, you should already have done a long-term retirement budget.


It should include planning on how inflation between now and age 100 will kill your pension and eat up your savings unless you have decent luck with investments. You either have rent or property taxes (if not, then income tax), and those will go up at least as fast as inflation.
Also account for that there will be a few, 3-4 at least, stockmarket crashes between now and then. You may find that in the beginning years/decade you may well continue to grow savings.


In general, a person should look at how exactly how much they spend every year and what they spend it on and modify those numbers to account for their life in retirement. I don't buy the "plan on needing 80% of your present income" and "take 4% of savings out each year". I think what you're spending now is pretty much what you'll want to keep spending if you plan on having fun.
If you planned well, you may be able to spend more (and have more fun with that money). But it sounds to me like you have an unusual situation what with your moving back from Kuwait.
Anyway, run simulations (buy a tool, or make a spreadsheet) to see what it will take money-wise to keep going until age 100 while including various what-if scenarios.


Then re-run your plans with 5% less at the outset. There's your answer


The biggest thing I had to adapt to in retirement is realizing I now have no way to recover from losses if I have some large unexpected expense such as losing a lawsuit, or discovering my insurance did not cover some big loss.
Or blowing it on a McLaren.


As for the cars, your situation is similar to ours. We're recently retired, but we're not deep into car-fever.
We have two cars, a Camry and a Mustang GT. We drive the Camry for most of our in town errands. The Mustang's duty is road trips, which vary from a few hundred to a few thousand miles. There is a world of difference in between the Mustang and Camry for fun-factor on trips. Having two so very different cars makes sense to me.
It will be the last high-performance car we'll ever buy, so it won't be a recurring expense.


OTOH, another way of looking at it regarding your 5% figure, you say you're going to pay cash, but the question is whether you'll pay it out of income or take it from savings. It sounds like your spending might be below your retirement income so if your income lets you replace that money back into savings over a few years (fewer years than to your next car purchase), then I would say your purchase sounds like a reasonably safe thing to do, retirement wise.
But do your long-term budget first.
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Old 09-17-2017, 10:31 PM
 
10,819 posts, read 8,075,211 times
Reputation: 17034
DH & I have two cars, tend to keep each 5-7 years. Roughly that means we trade in one of the cars and buy new every 3 years.
We do time our purchases to take max advantage of end-of-season sales.
Without getting ponderous about how much we spend on each new car and how much we get on trade-ins, the long and short is, for planning purposes, we allocate about about $4-$5k annually for car purchases.
fwiw, we always pay cash.

That's no different from before we retired.
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Old 09-18-2017, 07:53 AM
 
Location: Washington State
18,610 posts, read 9,618,463 times
Reputation: 15842
Quote:
Originally Posted by Thulsa View Post
I think you are looking at it the wrong way.
If you are planning to retire, you should already have done a long-term retirement budget.


It should include planning on how inflation between now and age 100 will kill your pension and eat up your savings unless you have decent luck with investments. You either have rent or property taxes (if not, then income tax), and those will go up at least as fast as inflation.
Also account for that there will be a few, 3-4 at least, stockmarket crashes between now and then. You may find that in the beginning years/decade you may well continue to grow savings.


In general, a person should look at how exactly how much they spend every year and what they spend it on and modify those numbers to account for their life in retirement. I don't buy the "plan on needing 80% of your present income" and "take 4% of savings out each year". I think what you're spending now is pretty much what you'll want to keep spending if you plan on having fun.
If you planned well, you may be able to spend more (and have more fun with that money). But it sounds to me like you have an unusual situation what with your moving back from Kuwait.
Anyway, run simulations (buy a tool, or make a spreadsheet) to see what it will take money-wise to keep going until age 100 while including various what-if scenarios.


Then re-run your plans with 5% less at the outset. There's your answer


The biggest thing I had to adapt to in retirement is realizing I now have no way to recover from losses if I have some large unexpected expense such as losing a lawsuit, or discovering my insurance did not cover some big loss.
Or blowing it on a McLaren.


As for the cars, your situation is similar to ours. We're recently retired, but we're not deep into car-fever.
We have two cars, a Camry and a Mustang GT. We drive the Camry for most of our in town errands. The Mustang's duty is road trips, which vary from a few hundred to a few thousand miles. There is a world of difference in between the Mustang and Camry for fun-factor on trips. Having two so very different cars makes sense to me.
It will be the last high-performance car we'll ever buy, so it won't be a recurring expense.




OTOH, another way of looking at it regarding your 5% figure, you say you're going to pay cash, but the question is whether you'll pay it out of income or take it from savings. It sounds like your spending might be below your retirement income so if your income lets you replace that money back into savings over a few years (fewer years than to your next car purchase), then I would say your purchase sounds like a reasonably safe thing to do, retirement wise.
But do your long-term budget first.
Good advice. I have already done long-term retirement planning but the thought of recovering from huge losses in the stock market for example is a concern. Since my employer, an engineering consulting company, still wants me to continue working, I could potentially work and pick up income later if needed.

Someone else mentioned the way I also look at it as taking 5% our of investment is a dip of 4% potential growth of in income or investment growth from that 5%.

Making offers on the car I want.
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Old 09-18-2017, 09:54 AM
 
611 posts, read 368,605 times
Reputation: 2032
Quote:
Originally Posted by Tall Traveler View Post
Good advice. I have already done long-term retirement planning but the thought of recovering from huge losses in the stock market for example is a concern. Since my employer, an engineering consulting company, still wants me to continue working, I could potentially work and pick up income later if needed.

Someone else mentioned the way I also look at it as taking 5% our of investment is a dip of 4% potential growth of in income or investment growth from that 5%.

Making offers on the car I want.


At some point, you have to tell us what you're getting so we can salivate along with you, lol.
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Old 09-18-2017, 11:56 AM
 
Location: Eastern Washington
14,270 posts, read 44,963,902 times
Reputation: 12877
Quote:
Originally Posted by Tall Traveler View Post
On what do you base that $12,000 to $15,000 amount? The car I'm likely going to buy is many times more than that and has a top speed over 200 mph. What this thread has shown me is that I analyze things to a far greater degree than the overwhelming majority and no one else really looks at their car purchases and considers what that does to their wealth.

About your comment on admitting that you can't beat the market and better to go with an index fund.
Buy it, buy it, buy it!

Hell-Cat, Hell-Cat, Hell-Cat!
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Old 09-18-2017, 06:50 PM
 
29,808 posts, read 34,894,042 times
Reputation: 11725
Quote:
Originally Posted by Tall Traveler View Post
Good advice. I have already done long-term retirement planning but the thought of recovering from huge losses in the stock market for example is a concern. Since my employer, an engineering consulting company, still wants me to continue working, I could potentially work and pick up income later if needed.

Someone else mentioned the way I also look at it as taking 5% our of investment is a dip of 4% potential growth of in income or investment growth from that 5%.

Making offers on the car I want.
You are not overthinking. You are just cognizant that you are considering spending a chunk of change on what could be depreciating asset. If so I understand the thought process. Happy thinking! Oh yeah this long in the tooth bull market can have a number of us thinking about portfolio resilience moving forward. How much in large chunk discretionary consumption would we want prior to a bear.
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Old 09-18-2017, 06:55 PM
 
Location: Washington State
18,610 posts, read 9,618,463 times
Reputation: 15842
Quote:
Originally Posted by M3 Mitch View Post
Buy it, buy it, buy it!

Hell-Cat, Hell-Cat, Hell-Cat!
Of course a fellow Washingtonian guessed correctly!

Pick it up Friday.
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