The $4,026,858.95 Car or a Worry-Free Retirement?

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Taylor Larimore
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The $4,026,858.95 Car or a Worry-Free Retirement?

Post by Taylor Larimore » Thu Mar 21, 2019 3:28 pm

Bogleheads:

The automobile industry must have the most successful marketing program in the world (even more successful than the investment industry. No longer is the automobile used to get from point A to Point B. Our car now represents prestige, safety, comfort and more. Even the lowest priced cars today are much better than the highest priced cars a few years back.

The easiest way to save money for retirement is to own an inexpensive automobile. Let me explain:

I used Edmonds "Five Year Cost to Own" to compare the current cost of my last car (a Corolla sedan) with the cost of the BMW 3 Series sedan (my neighbor's car). These are the results:


2018 BMW 3-Series 4-door sedan 5-year cost to own:. $71,347 (new $57,581)
2018 Toyota Corolla 4-door sedan 5-year cost to own: $26,149 (new $18,978)
5-Year Savings ................................................$45,198
1-Year Savings .................................................$9,039

Assuming we drive for 40 years (ages 25-65), what is the cumulative return of the $9,039/year savings?

According to bankrate.com., $9,039 saved each year for 40 years at 9% (stock market's average return) is (hold your breath) $4,026,858.95.

Driving a low-cost (perfectly adequate) automobile is the easiest way I know to have a worry-free retirement (we enjoyed two world cruises).

Best wishes
Taylor
Last edited by Taylor Larimore on Thu Mar 21, 2019 3:39 pm, edited 1 time in total.
"Simplicity is the master key to financial success." -- Jack Bogle

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Re: The $4,026,858.95 Car or a Worry-Free Retirement?

Post by ReformedSpender » Thu Mar 21, 2019 3:33 pm

YOLO Taylor. If you want the BMW... then get the BMW
Market history shows that when there's economic blue sky, future returns are low, and when the economy is on the skids, future returns are high. The best fishing is done in the most stormy waters.

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Re: The $4,026,858.95 Car or a Worry-Free Retirement?

Post by Thesaints » Thu Mar 21, 2019 3:38 pm

Taylor Larimore wrote:
Thu Mar 21, 2019 3:28 pm
Driving a low-cost (perfectly adequate) automobile is the easiest way I know to have a worry-free retirement (we enjoyed two world cruises).

Best wishes
Taylor
Perhaps, but it makes for a less entertaining life.

What you write about the BMW can certainly be extended to expensive wines, business class seats, designer clothing, etc.. At which point securing a worry-free retirement earlier is not worth the sacrifices now ?

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Re: The $4,026,858.95 Car or a Worry-Free Retirement?

Post by PluckyDucky » Thu Mar 21, 2019 3:38 pm

I've had my brand new honda civic for 2 years with only a windshield replacement and standard maintenance. Stupid rocks.

Here's to the next 18 years!

I look at the fancy cars in my parking garage and think, wouldn't it be nice... to have a better retirement!

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Re: The $4,026,858.95 Car or a Worry-Free Retirement?

Post by PluckyDucky » Thu Mar 21, 2019 3:39 pm

Thesaints wrote:
Thu Mar 21, 2019 3:38 pm
Taylor Larimore wrote:
Thu Mar 21, 2019 3:28 pm
Driving a low-cost (perfectly adequate) automobile is the easiest way I know to have a worry-free retirement (we enjoyed two world cruises).

Best wishes
Taylor
Perhaps, but it makes for a less entertaining life.

What you write about the BMW can certainly be extended to expensive wines, business class seats, designer clothing, etc.. At which point securing a worry-free retirement earlier is not worth the sacrifices now ?
Items merely for comfort are a waste in my opinion. Once you become comfortable, it's difficult to cut back. Ignorance is bliss.

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Re: The $4,000,000.00 Car or a worry-free retirement?

Post by DonIce » Thu Mar 21, 2019 3:39 pm

I would argue that superior safety features are worth paying for. While ensuring you have enough for retirement is important, ensuring you have the good health to enjoy that retirement is even more important. The average American has about a 50% chance in their life to be seriously injured (and a 1% chance to be killed) in a car crash. Injury in a car crash could lead to pain and complications that persist for decades and ruin your ability to fully enjoy your retirement years. If you can pay more for a car that will reduce the risk of being seriously injured that is an investment well worth making.

I'd rather live on just social security while being active and healthy than live in a wheelchair while being a billionaire.
Last edited by DonIce on Thu Mar 21, 2019 3:41 pm, edited 1 time in total.

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Re: The $4,026,858.95 Car or a Worry-Free Retirement?

Post by pointyhead » Thu Mar 21, 2019 3:41 pm

Hmmm....so BMW really does mean Big Money Waster!!!

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Re: The $4,026,858.95 Car or a Worry-Free Retirement?

Post by open_circuit » Thu Mar 21, 2019 3:41 pm

PluckyDucky wrote:
Thu Mar 21, 2019 3:39 pm
Items merely for comfort are a waste in my opinion. Once you become comfortable, it's difficult to cut back. Ignorance is bliss.
Hedonistic adaptation is my enemy as well. :sharebeer

Thanks for the post Taylor.

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Re: The $4,026,858.95 Car or a Worry-Free Retirement?

Post by Thesaints » Thu Mar 21, 2019 3:44 pm

Better to ignore the existence of hot water and continue to take cold showers. It also saves on the energy bill !

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Re: The $4,026,858.95 Car or a Worry-Free Retirement?

Post by stats99 » Thu Mar 21, 2019 3:46 pm

I agree that luxury car purchase is a big factor in reducing the retirement readiness of many Americans. Whether luxury or buying too much suv than needed it is quite the financial burden.

I calculate that my “savings” were at least $1 million over 40 years of car ownership between me and my wife. We purchased vehicles more expensive than a corolla, mid size sedans, mini vans, but kept most vehicles for 10-15 years. I also used a more conservative 4% compounding rate on the savings.

In my estimation, Americans overspend on the big 3:

Too much car
Too much house
Too much eating out

I “Fired” at 55.

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Re: The $4,026,858.95 Car or a Worry-Free Retirement?

Post by Darth Xanadu » Thu Mar 21, 2019 3:47 pm

Thesaints wrote:
Thu Mar 21, 2019 3:44 pm
Better to ignore the existence of hot water and continue to take cold showers. It also saves on the energy bill !
It would take quite a few showers to save that $4m, though.
"A courageous teacher, failure is."

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Re: The $4,026,858.95 Car or a Worry-Free Retirement?

Post by Nate79 » Thu Mar 21, 2019 3:50 pm

This is just one of many reasons that most Americans are broke, in debt up to their eyeballs, with to much month at the end of the money, and pitiful amount of retirement savings.

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Re: The $4,026,858.95 Car or a Worry-Free Retirement?

Post by gmaynardkrebs » Thu Mar 21, 2019 3:53 pm

Think back to what being a healthy 25 year old is all about:

At age 25, which is going to get you more chicks/guys?

A 3 series BMW in black metallic

OR

A promise of a retirement at age 65 with $4,026,858 dollars, which if she has any brains at will realize will be worth more like $800K just due to inflation alone, along with the fact that anyone who tells her there will be a 9% real return will lie about where he was the night before.

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Re: The $4,026,858.95 Car or a Worry-Free Retirement?

Post by lukestuckenhymer » Thu Mar 21, 2019 3:53 pm

I strongly believe in this philosophy, Taylor.
I am 32 and my first two cars (Honda Civic LXs with no upgrades) have cost $19,000 and $21,000

Could I afford a Tesla right now? Absolutely, but it's a want and not a need. Perhaps I will buy that sexy car when I'm in my 40s or 50s. Investing takes precedence now.

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Re: The $4,000,000.00 Car or a worry-free retirement?

Post by Grt2bOutdoors » Thu Mar 21, 2019 3:55 pm

DonIce wrote:
Thu Mar 21, 2019 3:39 pm
I would argue that superior safety features are worth paying for. While ensuring you have enough for retirement is important, ensuring you have the good health to enjoy that retirement is even more important. The average American has about a 50% chance in their life to be seriously injured (and a 1% chance to be killed) in a car crash. Injury in a car crash could lead to pain and complications that persist for decades and ruin your ability to fully enjoy your retirement years. If you can pay more for a car that will reduce the risk of being seriously injured that is an investment well worth making.

I'd rather live on just social security while being active and healthy than live in a wheelchair while being a billionaire.
You can have all the safety features in the world and still be hurt in a car crash. Don't let that false sense of security get to you.
If you drive recklessly, you will pay the price. If you are hit by a faster moving or heavier vehicle, you are likely going to get hurt. It's just physics. Heck, we have some of those safety devices harming the folks they were intended to protect. Best of all, you don't need to spend $72K, you can spend 1/3 and get a perfectly new, safe, with all the safety features and keep the change instead of sending it to Germany.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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Re: The $4,026,858.95 Car or a Worry-Free Retirement?

Post by willthrill81 » Thu Mar 21, 2019 3:57 pm

In terms of avoiding the hedonic treadmill (i.e. you must continually get more and more stuff/experiences to get the same emotional gratification), I think that the sweet spot in terms of vehicles for us was our purchase a year ago of a brand new, AWD Buick Encore. We paid under $20k for it. Consumer Reports and others refers to it as a "sub-compact, entry-level luxury SUV." It's small but fits our family of three perfectly fine. I love the on-board navigation and entertainment system (it uses my phone, which I've always got with me anyway), rides very well, is quiet, has great safety ratings, is rated for being very reliable, and has averaged nearly 32 MPG. We could have spent a couple thousand less getting one that was slightly used, but it just wasn't worth to us. This was our very first new car, and we've loved it. :D

I don't think that, in today's dollars, I would ever be willing to fork over $50k or more for something to haul me around town in. I value financial independence more than that. YMMV.
Last edited by willthrill81 on Thu Mar 21, 2019 3:57 pm, edited 1 time in total.
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Re: The $4,026,858.95 Car or a Worry-Free Retirement?

Post by smitcat » Thu Mar 21, 2019 3:57 pm

"According to bankrate.com., $9,039 saved each year for 40 years at 9% (stock market's average return) is (hold your breath) $4,026,858.95."
Did a 3 series BMW even cost that much in 1978? (40 yrs back)

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Re: The $4,026,858.95 Car or a Worry-Free Retirement?

Post by bigtex » Thu Mar 21, 2019 3:58 pm

Taylor Larimore wrote:
Thu Mar 21, 2019 3:28 pm
Bogleheads:

The automobile industry must have the most successful marketing program in the world (even more successful than the investment industry. No longer is the automobile used to get from point A to Point B. Our car now represents prestige, safety, comfort and more. Even the lowest priced cars today are much better than the highest priced cars a few years back.

The easiest way to save money for retirement is to own an inexpensive automobile. Let me explain:

I used Edmonds "Five Year Cost to Own" to compare the current cost of my last car (a Corolla sedan) with the cost of the BMW 3 Series sedan (my neighbor's car). These are the results:


2018 BMW 3-Series 4-door sedan 5-year cost to own:. $71,347 (new $57,581)
2018 Toyota Corolla 4-door sedan 5-year cost to own: $26,149 (new $18,978)
5-Year Savings ................................................$45,198
1-Year Savings .................................................$9,039

Assuming we drive for 40 years (ages 25-65), what is the cumulative return of the $9,039/year savings?

According to bankrate.com., $9,039 saved each year for 40 years at 9% (stock market's average return) is (hold your breath) $4,026,858.95.

Driving a low-cost (perfectly adequate) automobile is the easiest way I know to have a worry-free retirement (we enjoyed two world cruises).

Best wishes
Taylor
Does a 2018 BMW 3 Series 4-door sedan really cost $57,581 new? I guess I thought they were more like upper $30s.

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Re: The $4,026,858.95 Car or a Worry-Free Retirement?

Post by Grt2bOutdoors » Thu Mar 21, 2019 3:58 pm

gmaynardkrebs wrote:
Thu Mar 21, 2019 3:53 pm
Think back to what being a healthy 25 year old is all about:

At age 25, which is going to get you more chicks/guys?

A 3 series BMW in black metallic

OR

A promise of a retirement at age 65 with $4,026,858 dollars, which if she has any brains at will realize will be worth more like $800K just due to inflation alone, along with the fact that anyone who tells her there will be a 9% real return will lie about where he was the night before.
Nah!, a killer smile and some time in the gym. Having a big bank account at age 25 attracts the wrong crowd.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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Re: The $4,026,858.95 Car or a Worry-Free Retirement?

Post by Snowjob » Thu Mar 21, 2019 4:01 pm

stats99 wrote:
Thu Mar 21, 2019 3:46 pm
In my estimation, Americans overspend on the big 3:

Too much car Glad I'm not a car person
Too much house Guilty
Too much eating out Guilty

...
The only saving grace is I got into the house way after I built up my savings so I'm not behind the 8 ball as much as if I started with that thing!

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Re: The $4,000,000.00 Car or a worry-free retirement?

Post by DonIce » Thu Mar 21, 2019 4:01 pm

Grt2bOutdoors wrote:
Thu Mar 21, 2019 3:55 pm
You can have all the safety features in the world and still be hurt in a car crash. Don't let that false sense of security get to you.
If you drive recklessly, you will pay the price.
Of course. But all else being equal, modern safety features like automatic pre-collision breaking have been shown to significantly reduce crashes and crash injuries. Until recently, these have only been available in high end models.
If you are hit by a faster moving or heavier vehicle, you are likely going to get hurt. It's just physics.
Indeed, which is why mass is also an important safety factor. Bigger vehicles are safer, all else being equal. So it may also be worthwhile getting a larger and heavier car for the safety aspect, which of course is also more expensive.

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Re: The $4,026,858.95 Car or a Worry-Free Retirement?

Post by Grt2bOutdoors » Thu Mar 21, 2019 4:02 pm

bigtex wrote:
Thu Mar 21, 2019 3:58 pm
Taylor Larimore wrote:
Thu Mar 21, 2019 3:28 pm
Bogleheads:

The automobile industry must have the most successful marketing program in the world (even more successful than the investment industry. No longer is the automobile used to get from point A to Point B. Our car now represents prestige, safety, comfort and more. Even the lowest priced cars today are much better than the highest priced cars a few years back.

The easiest way to save money for retirement is to own an inexpensive automobile. Let me explain:

I used Edmonds "Five Year Cost to Own" to compare the current cost of my last car (a Corolla sedan) with the cost of the BMW 3 Series sedan (my neighbor's car). These are the results:


2018 BMW 3-Series 4-door sedan 5-year cost to own:. $71,347 (new $57,581)
2018 Toyota Corolla 4-door sedan 5-year cost to own: $26,149 (new $18,978)
5-Year Savings ................................................$45,198
1-Year Savings .................................................$9,039

Assuming we drive for 40 years (ages 25-65), what is the cumulative return of the $9,039/year savings?

According to bankrate.com., $9,039 saved each year for 40 years at 9% (stock market's average return) is (hold your breath) $4,026,858.95.

Driving a low-cost (perfectly adequate) automobile is the easiest way I know to have a worry-free retirement (we enjoyed two world cruises).

Best wishes
Taylor
Does a 2018 BMW 3 Series 4-door sedan really cost $57,581 new? I guess I thought they were more like upper $30s.
Yes, it's just under $40K, but Edmonds is counting the cost of financing, insurance, depreciation, repairs/maintenance. The first year depreciation charge is just off the chart - a car costing $60 grand new, they are predicting the first year depreciation expense of $11K. :oops: Buy off lease, certified, let some other sucker pay for the depreciation.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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Re: The $4,000,000.00 Car or a worry-free retirement?

Post by Grt2bOutdoors » Thu Mar 21, 2019 4:03 pm

DonIce wrote:
Thu Mar 21, 2019 4:01 pm
Grt2bOutdoors wrote:
Thu Mar 21, 2019 3:55 pm
You can have all the safety features in the world and still be hurt in a car crash. Don't let that false sense of security get to you.
If you drive recklessly, you will pay the price.
Of course. But all else being equal, modern safety features like automatic pre-collision breaking have been shown to significantly reduce crashes and crash injuries. Until recently, these have only been available in high end models.
If you are hit by a faster moving or heavier vehicle, you are likely going to get hurt. It's just physics.
Indeed, which is why mass is also an important safety factor. Bigger vehicles are safer, all else being equal. So it may also be worthwhile getting a larger and heavier car for the safety aspect, which of course is also more expensive.
Insurance costs for liability go up the bigger and heavier your vehicle is. Insurance companies are not stupid. They know the damage these vehicles can wreak.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Dudley
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Re: The $4,026,858.95 Car or a Worry-Free Retirement?

Post by Dudley » Thu Mar 21, 2019 4:04 pm

But Taylor, tell us how it felt to drive a manual BMW M3....

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Re: The $4,026,858.95 Car or a Worry-Free Retirement?

Post by fourkids » Thu Mar 21, 2019 4:04 pm

I fully agree.
I'd rather retire at age 50 with my Toyotas while my neighbors work until their 67 or 70 with their BMW and Land Rovers.
Cars are purely functional to me.

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Re: The $4,026,858.95 Car or a Worry-Free Retirement?

Post by fourkids » Thu Mar 21, 2019 4:07 pm

Thesaints wrote:
Thu Mar 21, 2019 3:44 pm
Better to ignore the existence of hot water and continue to take cold showers. It also saves on the energy bill !
but cold showers don't add up to a savings of $4 million. The extra $500/year I spend on a hot shower makes me a tolerable person

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Re: The $4,000,000.00 Car or a worry-free retirement?

Post by stoptothink » Thu Mar 21, 2019 4:10 pm

DonIce wrote:
Thu Mar 21, 2019 4:01 pm
Grt2bOutdoors wrote:
Thu Mar 21, 2019 3:55 pm
You can have all the safety features in the world and still be hurt in a car crash. Don't let that false sense of security get to you.
If you drive recklessly, you will pay the price.
Of course. But all else being equal, modern safety features like automatic pre-collision breaking have been shown to significantly reduce crashes and crash injuries. Until recently, these have only been available in high end models.
If you are hit by a faster moving or heavier vehicle, you are likely going to get hurt. It's just physics.
Indeed, which is why mass is also an important safety factor. Bigger vehicles are safer, all else being equal. So it may also be worthwhile getting a larger and heavier car for the safety aspect, which of course is also more expensive.
The term "significant" means different things to different people. Significant percentage-wise, sure, significant in total numbers: no. I have a really hard time with this "safety" argument because there are so many ways to decrease your risk of injury or death significantly more than buying a more expensive "safer" car, and pretty much all of them are significantly cheaper.

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Re: The $4,026,858.95 Car or a Worry-Free Retirement?

Post by smitcat » Thu Mar 21, 2019 4:11 pm

willthrill81 wrote:
Thu Mar 21, 2019 3:57 pm
In terms of avoiding the hedonic treadmill (i.e. you must continually get more and more stuff/experiences to get the same emotional gratification), I think that the sweet spot in terms of vehicles for us was our purchase a year ago of a brand new, AWD Buick Encore. We paid under $20k for it. Consumer Reports and others refers to it as a "sub-compact, entry-level luxury SUV." It's small but fits our family of three perfectly fine. I love the on-board navigation and entertainment system (it uses my phone, which I've always got with me anyway), rides very well, is quiet, has great safety ratings, is rated for being very reliable, and has averaged nearly 32 MPG. We could have spent a couple thousand less getting one that was slightly used, but it just wasn't worth to us. This was our very first new car, and we've loved it. :D

I don't think that, in today's dollars, I would ever be willing to fork over $50k or more for something to haul me around town in. I value financial independence more than that. YMMV.
Yes - but everyone is different and you are willing to overpay for some items as well.
Money is to spend as that its only use , now or later if its what makes you happy then that is all that counts.

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Re: The $4,026,858.95 Car or a Worry-Free Retirement?

Post by Ferdinand2014 » Thu Mar 21, 2019 4:19 pm

Cars are my downfall. I LOVE cars. I track mine whenever I can. Cars are not transportation for me. They are what I do for fun. Certainly your point is well taken.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett

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Re: The $4,026,858.95 Car or a Worry-Free Retirement?

Post by Thesaints » Thu Mar 21, 2019 4:35 pm

fourkids wrote:
Thu Mar 21, 2019 4:07 pm
Thesaints wrote:
Thu Mar 21, 2019 3:44 pm
Better to ignore the existence of hot water and continue to take cold showers. It also saves on the energy bill !
but cold showers don't add up to a savings of $4 million. The extra $500/year I spend on a hot shower makes me a tolerable person
So there are indispensable "luxuries" and superfluous ones. Which are which depends on individual choices.
As another poster very correctly pointed out, never experiencing a certain luxury is the best way to keeping it in the superfluous field.

Then we can discuss how a 3-series does not cost $14k/yr. to keep. That number assumes buying it new and recycling it every 5 years, cost of financing, full insurance coverage, etc.
I mean, a 3 series new costs 41k and comes with 4 years of maintenance. That $57,581 figure must be a fully loaded 330xi model and include sales taxes. And where am I supposed to spend the other 30k (or 14k) ?
Also, nobody's gonna get a 9% stock market return for 40 years, net of taxes.
Last edited by Thesaints on Thu Mar 21, 2019 4:59 pm, edited 1 time in total.

ohai
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Re: The $4,026,858.95 Car or a Worry-Free Retirement?

Post by ohai » Thu Mar 21, 2019 4:41 pm

You mean $4 million in future value 40 years from now assuming 9% return. $4,026,858.95 x 1.09^-40 = $128,205 in today's money. Would you pay $128k to drive a BMW for the next 40 years, rather than a Corolla?

MathWizard
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Re: The $4,026,858.95 Car or a Worry-Free Retirement?

Post by MathWizard » Thu Mar 21, 2019 4:47 pm

Taylor Larimore wrote:
Thu Mar 21, 2019 3:28 pm
Bogleheads:

The automobile industry must have the most successful marketing program in the world (even more successful than the investment industry. No longer is the automobile used to get from point A to Point B. Our car now represents prestige, safety, comfort and more. Even the lowest priced cars today are much better than the highest priced cars a few years back.

The easiest way to save money for retirement is to own an inexpensive automobile. Let me explain:

I used Edmonds "Five Year Cost to Own" to compare the current cost of my last car (a Corolla sedan) with the cost of the BMW 3 Series sedan (my neighbor's car). These are the results:


2018 BMW 3-Series 4-door sedan 5-year cost to own:. $71,347 (new $57,581)
2018 Toyota Corolla 4-door sedan 5-year cost to own: $26,149 (new $18,978)
5-Year Savings ................................................$45,198
1-Year Savings .................................................$9,039

Assuming we drive for 40 years (ages 25-65), what is the cumulative return of the $9,039/year savings?

According to bankrate.com., $9,039 saved each year for 40 years at 9% (stock market's average return) is (hold your breath) $4,026,858.95.

Driving a low-cost (perfectly adequate) automobile is the easiest way I know to have a worry-free retirement (we enjoyed two world cruises).

Best wishes
Taylor
Wow. That is even worse than I thought it would be.
Fancy cars are a way to go to the poor house in style.

Thanks Taylor.

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Re: The $4,026,858.95 Car or a Worry-Free Retirement?

Post by Stormbringer » Thu Mar 21, 2019 5:17 pm

Warren Buffett wrote:It's nice to have a lot of money, but you know, you don't want to keep it around forever. I prefer buying things. Otherwise, it's a little like saving sex for your old age.
"Compound interest is the most powerful force in the universe." - Albert Einstein

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Re: The $4,026,858.95 Car or a Worry-Free Retirement?

Post by cookymonster » Thu Mar 21, 2019 5:31 pm

I sincerely hate automobiles and have switched to bicycle commuting over the past two years. To me, a Corolla is a $2 million car (i.e. $4,000 annually compounded over a lifetime) and not worth as much as a worry free retirement. I know I am in the minority though.

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Re: The $4,026,858.95 Car or a Worry-Free Retirement?

Post by WhiteMaxima » Thu Mar 21, 2019 5:40 pm

Carless or worry-free retirement. Ride bike or bus.

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Re: The $4,026,858.95 Car or a Worry-Free Retirement?

Post by neilpilot » Thu Mar 21, 2019 5:42 pm

cookymonster wrote:
Thu Mar 21, 2019 5:31 pm
I sincerely hate automobiles and have switched to bicycle commuting over the past two years. To me, a Corolla is a $2 million car (i.e. $4,000 annually compounded over a lifetime) and not worth as much as a worry free retirement. I know I am in the minority though.
Yes you are in the minority. Some of us can easily afford to drive a Corolla or better, and still have a worry free retirement.

Starfish
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Re: The $4,026,858.95 Car or a Worry-Free Retirement?

Post by Starfish » Thu Mar 21, 2019 5:47 pm

Thesaints wrote:
Thu Mar 21, 2019 3:38 pm
Taylor Larimore wrote:
Thu Mar 21, 2019 3:28 pm
Driving a low-cost (perfectly adequate) automobile is the easiest way I know to have a worry-free retirement (we enjoyed two world cruises).

Best wishes
Taylor
Perhaps, but it makes for a less entertaining life.

What you write about the BMW can certainly be extended to expensive wines, business class seats, designer clothing, etc.. At which point securing a worry-free retirement earlier is not worth the sacrifices now ?
None of this can be included by any stretch into sacrifices. Most people can skip these things - and they do all the time - without the slightest effort.
Otherwise the answer is easy. Happiness per dollar in both cases. If 3 series brings you double, triple the joy than a GTI or Miata, then at least is not a terrible purchase, but usually is not even remotely the case. If a 100$ wine gives you triple the pleasure of a 30$ wine, while still not financially wise at least is not a bad value.

If the retirement time that can be bought with 1$ brings more joy than the expense now of 1$, then is better to spend the dollar.

shawcroft
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The $4,026,858.95 Car or a Worry-Free Retirement?

Post by shawcroft » Thu Mar 21, 2019 5:47 pm

Taylor Larimore wrote:
Thu Mar 21, 2019 3:28 pm
Driving a low-cost (perfectly adequate) automobile is the easiest way I know to have a worry-free retirement (we enjoyed two world cruises).
Very insightful- and sobering- post, Taylor
With the lower future investment returns predicted recently by Jack Bogle and others, it is even more important to understand the difference between true needs (and how to address them) and the desire for fancy stuff created by clever marketing.
In my younger days, I drove an unimpressive 1959 Chevrolet for more than 15 years and still managed to convince a lovely and wonderful lady to marry me (there's another example of clever marketing).
Shawcroft

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HomerJ
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Re: The $4,026,858.95 Car or a Worry-Free Retirement?

Post by HomerJ » Thu Mar 21, 2019 5:48 pm

Thesaints wrote:
Thu Mar 21, 2019 3:38 pm
Taylor Larimore wrote:
Thu Mar 21, 2019 3:28 pm
Driving a low-cost (perfectly adequate) automobile is the easiest way I know to have a worry-free retirement (we enjoyed two world cruises).

Best wishes
Taylor
Perhaps, but it makes for a less entertaining life.
Are you kidding me? Driving a BMW every day in traffic to work does not offer 4 million dollars of entertainment.

Well, that's my opinion anyway... I'd rather drive a Toyota every day for 40 years, and spend $2 million on OTHER stuff throughout my working years, and still have plenty for retirement.

If you don't pay too much for the house, and you don't pay too much for the car (especially the car! Houses at least hold their value mostly), you don't have to sweat anything else.

I'd far rather have $500 a month to blow on little stuff than a "real nice" car (which I mostly would only use to drive to work every day or the grocery store)
The J stands for Jay

sport
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Re: The $4,026,858.95 Car or a Worry-Free Retirement?

Post by sport » Thu Mar 21, 2019 6:00 pm

I believe in moderation in all things. There are many choices between a Corolla and a BMW. For example, a Camry costs a little more than a Corolla, but provides much more comfort without getting involved with high-priced luxury cars. Also, if you spend a little more on a car, you will be happier with it and may decide to keep it longer than a more meager vehicle. One extra year will probably make up the cost difference.

Starfish
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Re: The $4,000,000.00 Car or a worry-free retirement?

Post by Starfish » Thu Mar 21, 2019 6:01 pm

DonIce wrote:
Thu Mar 21, 2019 3:39 pm
The average American has about a 50% chance in their life to be seriously injured (and a 1% chance to be killed) in a car crash.
Do you have data for this? Because it sounds exaggerated. I know a lot of Americans who passed half of their life expectancy but none went through a serious accident.

dknightd
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Re: The $4,026,858.95 Car or a Worry-Free Retirement?

Post by dknightd » Thu Mar 21, 2019 6:04 pm

If the bmw driver saved $9040 per year they end up with more than the Corolla driver :greedy

Broken Man 1999
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Re: The $4,026,858.95 Car or a Worry-Free Retirement?

Post by Broken Man 1999 » Thu Mar 21, 2019 6:09 pm

So, if you drive a Corolla, remember, you still have to save (and invest) $9039/year for 40 years, earning a 9% return.

Driving a Corolla might be easy to do, saving that $9,039/year might stretch a lot of budgets.

All things, including transportation, in moderation has worked for us.

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven than I shall not go. " -Mark Twain

BogBod
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Re: The $4,026,858.95 Car or a Worry-Free Retirement?

Post by BogBod » Thu Mar 21, 2019 6:10 pm

Taylor has another +1 here.

When my partners and I started our business 12 years ago, in addition to other salaried compensation, we were able to take $800 per month distributions (it's more complicated than that, but not necessary for the purposes of this post).

One partner leased a Mercedes with that $800/month.
I saved and invested every penny of that $800/month and continued driving my Corolla. Bought another Corolla in 2011, still driving it.

That partner, great guy, stresses about his kids college tuition payments.
My older son starts college this fall and my next son will start next year. Money is already there for both college tuitions, for four years each.

My Corolla has bluetooth for the phone and to play podcasts. That is all I need, and I get 37 mpg since I almost exclusively drive highway.

Yes, Taylor, I am on your team.

H-Town
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Re: The $4,000,000.00 Car or a worry-free retirement?

Post by H-Town » Thu Mar 21, 2019 6:12 pm

DonIce wrote:
Thu Mar 21, 2019 3:39 pm
I would argue that superior safety features are worth paying for. While ensuring you have enough for retirement is important, ensuring you have the good health to enjoy that retirement is even more important. The average American has about a 50% chance in their life to be seriously injured (and a 1% chance to be killed) in a car crash. Injury in a car crash could lead to pain and complications that persist for decades and ruin your ability to fully enjoy your retirement years. If you can pay more for a car that will reduce the risk of being seriously injured that is an investment well worth making.

I'd rather live on just social security while being active and healthy than live in a wheelchair while being a billionaire.
You're better off not trusting your life with the safety features.

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Re: The $4,026,858.95 Car or a Worry-Free Retirement?

Post by Thesaints » Thu Mar 21, 2019 6:13 pm

BogBod wrote:
Thu Mar 21, 2019 6:10 pm
Taylor has another +1 here.

When my partners and I started our business 12 years ago, in addition to other salaried compensation, we were able to take $800 per month distributions (it's more complicated than that, but not necessary for the purposes of this post).

One partner leased a Mercedes with that $800/month.
I saved and invested every penny of that $800/month and continued driving my Corolla. Bought another Corolla in 2011, still driving it.

That partner, great guy, stresses about his kids college tuition payments.
My older son starts college this fall and my next son will start next year. Money is already there for both college tuitions, for four years each.

My Corolla has bluetooth for the phone and to play podcasts. That is all I need, and I get 37 mpg since I almost exclusively drive highway.

Yes, Taylor, I am on your team.
You partner's mistake was the lease, not the Mercedes.

crystalbank
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Re: The $4,026,858.95 Car or a Worry-Free Retirement?

Post by crystalbank » Thu Mar 21, 2019 6:14 pm

Although I love cars, I tend to agree with the post. I get really sad driving a sports car in stop and go traffic everyday. I always say to myself that I'm gonna get rid of it soon but then again every once in a while I find myself driving in a winding road with no traffic and I feel like it's all worth it. It's a never ending dilemma.

But once my current expensive sporty german car reaches end of life, I'm in no way getting another sporty luxury car. Probably won't buy a corolla, but something like a hot hatch.

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Re: The $4,026,858.95 Car or a Worry-Free Retirement?

Post by stoptothink » Thu Mar 21, 2019 6:15 pm

Starfish wrote:
Thu Mar 21, 2019 5:47 pm
Thesaints wrote:
Thu Mar 21, 2019 3:38 pm
Taylor Larimore wrote:
Thu Mar 21, 2019 3:28 pm
Driving a low-cost (perfectly adequate) automobile is the easiest way I know to have a worry-free retirement (we enjoyed two world cruises).

Best wishes
Taylor
Perhaps, but it makes for a less entertaining life.

What you write about the BMW can certainly be extended to expensive wines, business class seats, designer clothing, etc.. At which point securing a worry-free retirement earlier is not worth the sacrifices now ?
None of this can be included by any stretch into sacrifices. Most people can skip these things - and they do all the time - without the slightest effort.
Otherwise the answer is easy. Happiness per dollar in both cases. If 3 series brings you double, triple the joy than a GTI or Miata, then at least is not a terrible purchase, but usually is not even remotely the case. If a 100$ wine gives you triple the pleasure of a 30$ wine, while still not financially wise at least is not a bad value.

If the retirement time that can be bought with 1$ brings more joy than the expense now of 1$, then is better to spend the dollar.
I tracked superbikes in my early-mid 20's and autocrossed a civic si when I was a kid (early 20s), I love cars (pretty much everything with engines). Reality is, when looking for a new vehicle 2yrs ago, to purchase something noticeably nicer in any way than what we got (VW jetta) we were looking at spending at least twice as much (another $14k). Wife and I immediately started listing off things we could do for less than that delta that would have a significantly greater immediate and long-lasting impact on our quality of life: it was an almost endless list. As a responsible adult I just can't stomach how bad of an investment in QOL/$ a car that you will commute in is(at least for us), even if we can easily afford it. A car that you will track, I can sort of understand and I'll do it ~20yrs when we have F-U money, but I've driven quite a few very high end sports cars on the street and it just doesn't "do it" any more than an economy car (for me).

ScubaHogg
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Re: The $4,000,000.00 Car or a worry-free retirement?

Post by ScubaHogg » Thu Mar 21, 2019 6:18 pm

DonIce wrote:
Thu Mar 21, 2019 3:39 pm
The average American has about a 50% chance in their life to be seriously injured (and a 1% chance to be killed) in a car crash. Injury in a car crash could lead to pain and complications that persist for decades and ruin your ability to fully enjoy your retirement years.
Both these numbers seem high. 50% of being "seriously" injured? Back of the envelope math suggests that means almost 2.1 million people are seriously injured in car crashes each year. I can't imagine that is true. Do you have a source?

In any case, you would have to balance the increase of "health" (derived from the safety features) from driving these fancier cars with the decrease in health cause by additional years sitting in a cubicle, internalizing a lot of stress, etc.

smitcat
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Re: The $4,026,858.95 Car or a Worry-Free Retirement?

Post by smitcat » Thu Mar 21, 2019 6:21 pm

stoptothink wrote:
Thu Mar 21, 2019 6:15 pm
Starfish wrote:
Thu Mar 21, 2019 5:47 pm
Thesaints wrote:
Thu Mar 21, 2019 3:38 pm
Taylor Larimore wrote:
Thu Mar 21, 2019 3:28 pm
Driving a low-cost (perfectly adequate) automobile is the easiest way I know to have a worry-free retirement (we enjoyed two world cruises).

Best wishes
Taylor
Perhaps, but it makes for a less entertaining life.

What you write about the BMW can certainly be extended to expensive wines, business class seats, designer clothing, etc.. At which point securing a worry-free retirement earlier is not worth the sacrifices now ?
None of this can be included by any stretch into sacrifices. Most people can skip these things - and they do all the time - without the slightest effort.
Otherwise the answer is easy. Happiness per dollar in both cases. If 3 series brings you double, triple the joy than a GTI or Miata, then at least is not a terrible purchase, but usually is not even remotely the case. If a 100$ wine gives you triple the pleasure of a 30$ wine, while still not financially wise at least is not a bad value.

If the retirement time that can be bought with 1$ brings more joy than the expense now of 1$, then is better to spend the dollar.
I tracked superbikes in my early-mid 20's and autocrossed a civic si when I was a kid (early 20s), I love cars (pretty much everything with engines). Reality is, when looking for a new vehicle 2yrs ago, to purchase something noticeably nicer in any way than what we got (VW jetta) we were looking at spending at least twice as much (another $14k). Wife and I immediately started listing off things we could do for less than that delta that would have a significantly greater immediate and long-lasting impact on our quality of life: it was an almost endless list. As a responsible adult I just can't stomach how bad of an investment in QOL/$ a car that you will commute in is(at least for us), even if we can easily afford it. A car that you will track, I can sort of understand and I'll do it ~20yrs when we have F-U money, but I've driven quite a few very high end sports cars on the street and it just doesn't "do it" any more than an economy car (for me).
Nothing to argue about here - if you don't like something then why spend the money?
But if you do really like something its best to figure out a way to do it while you can.
A car guy can figure that out of its still on their radar of things that matter.

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