Tingting1013 wrote: ↑Fri Sep 25, 2020 10:14 am
If you could lease a brand new car for $1,000 more per year than what it costs you to drive your used car, would you?
Would paying an extra $1,000 per year in car expenses meaningfully change anyone’s retirement trajectory?
There is a lot of moral superiority and judgement in your post, not a lot of wisdom.
Yes, it definitely would change your retirement trajectory. Not radically, but I would call it nontrivial. I just did some calculations on this, partially to recheck the logic of my own saving plan:
Consider a household earning roughly the US household median, saving 10% per year vs. $1000 less than that amount. If their goal is to have 80% of their pre-retirement income by the 4% rule, including $2,000 per month from Social Security, with 6% real return (roughly median performance of a 60/40 portfolio, so in half of years, this won't be enough), it will delay their retirement by 2-3 years.
Coincidentally, that's also roughly the cumulative time they will spend in the car (2.8 years at 12,000 miles driving per year), so every hour they enjoy those nicer amenities is an extra hour they have to work.
Obviously, this becomes easier to afford the higher one's income, but harder if the market fairs worse than its median historical returns, and much harder for more realistic household earning median income, who typically don't save anywhere near 10%.
Personally, I'm still early enough in my accumulation phase that I see too much risk in the potential variation of returns to justify that expense. I have the impression the OP it at a stage where they can have a little more confidence in reaching their long term goals, so I don't dispute it as a legitimate discretionary option.