Reduce Driving to Save Money in Retirement

Giving up a second car could improve your retirement finances.

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We love driving in the United States. It’s great to cruise down to the beach or take a drive on the freeway. And many of us need to drive to work because of a lack of public transportation options. However, the cost of driving has been increasing quickly over the last few years, which is especially hard on retirees living on a fixed income.

[See 10 Places to Go Carless in Retirement.]

By the end of 2011, we will have spent more than $490 billion on gasoline. That’s $100 billion more than in 2010, according to Energy Trap, a non-partisan think tank based in Washington, D.C. By next spring, a gallon of gasoline is predicted to cost $4.50. And the cost of gasoline will only go up as the economy continues to recover and worldwide demand resumes. The average American family spends almost $8,000 per year on gasoline and transportation. This includes car payments, gas, insurance, parking, and repairs. Here are some ways retirees can reduce the cost of transportation.

Share a family vehicle. Many families have two cars or more, but couples can cut back to one car in retirement. While it’s very convenient to have your own car, the cost of operating an extra vehicle is very expensive. By sharing one car per family, you save on insurance, car payments, repairs, maintenance costs, gasoline, and parking. It’s not worth the extra expense to keep another car around if you don’t drive it to work every day.

[See 7 Costs to Eliminate Before You Retire.]

Public transportation. If you are thinking about moving when you retire, include public transportation in the equation. Many cities have been improving their public transportation infrastructure over the last few years. Portland, Ore., for example, has great light rail and street car services and they are still expanding. If you are planning to downsize, why not see if city living is for you? You can always rent for a few years to see if you like it.

Car sharing. There are also car sharing programs such as Zipcar, which are very helpful if you want to get rid of your vehicle completely. You can schedule a few hours of car rental over the Internet for when you need to run errands or get a hankering for a drive in the countryside. The hourly rate includes gasoline and insurance, so you don’t have to worry about any extra costs.

Drive less. If you can’t bear to give up your vehicle, there are still ways to reduce expenses. You can arrange car pooling with your neighbors to run errands. Avoid purchasing a new vehicle and keep the old vehicle running as long as possible, which will save a lot of money on car payments and insurance. Do a little research on how to increase your car’s miles per gallon. Driving slower and minimizing acceleration are two easy ways to stretch the number of miles you can drive per gallon of gas.

[See Retirees Need to Plan for a Support System.]

Although it’s not fun to think about, it’s inevitable that one day we won’t be able to drive anymore. As we age, it gets more difficult for many people to continue driving. If you plan ahead and figure out how to live without a car, then the adjustment to going carless will be much easier.

Joe Udo is planning an exit strategy from his corporate job by reducing expenses and increasing passive income. He blogs about his journey to early retirement at Retire by 40.