After Labor Day, let’s talk retirement

AAA Cost of Ownership Calculator

Owning and operating an automobile has always been quite an expensive endeavor. After housing, it’s often the second biggest expense type for many. And similar to housing, if done wrong, it can cost you the chance of a healthy and wealthy retirement.

The American Automobile Association (AAA) provides a great tool, a calculator that can tell you how much your own make and model costs you in California.

Here are a few examples, like the basic Tesla 3 Standard compared to the Tesla Y Performance representing top-selling EVs. And the top-selling gas guzzler is represented by an F-150 Standard and its F-150 Raptor SuperCrew brother.

Thanks to all the expensive Advanced Driver Assistance Systems (ADAS) added to cars these days, the average price of a new car is hovering around $48,500 (often these systems aren’t even enabled by default, so they are just driven around as expensive weight – but that is a story for another time).

The most successful car in America cost its driver $100,000 for five years. Pretending there is no inflation, no price gouging by the oil industry, and no increase in taxes and fees, over 50 years, the Direct Cost of owning and operating a base model F-150 would be $1,000,000 in California.

Good Mom, Bad Mom

This blogger digs into AAA’s numbers as well. She focuses on reducing the number of cars per family. As a mom, she focuses on what it means to have teen drivers in the family. In that case, the insurance costs will go up significantly. Adding that high schooler one year later to the policy is already paying for that eBike the high schooler should be using to get to school. The student would become smarter and healthier while also avoiding the stress and headaches of traffic and parking. And they are becoming better traffic participants and drivers as well.

Good Mom also focuses on setting the kids up with an investment or retirement account and putting those $12,000 (AAA) into a Vanguard Fund instead. In her calculations, the Vanguard account would be around $1.1 million after year 24. After 50 years of investing in this, she calculated a retirement account of $11M. Now that would be a nice retirement to look forward to.

U.S. Retirement Accounts

At this point, it should be pointed out again that as of 2023, only 8%-10% of retirees have savings of $1 million or more, and only 12% have achieved the recommended savings of $555,000. Instead, in 2022, the average American retiree had retirement savings of $191,659, and by 2023, that number went down another 10% to $170,726. 44% of retirees struggle to afford necessities like groceries, housing, utilities and medical expenses. Around 37% of U.S. residents have no retirement savings at all.

And notice how that article never mentions automobiles within those necessities? That could have two reasons, of course:

1. An automobile is usually regarded as a luxury.
2. 91% of American households do own cars already.

These numbers don’t add up unless you realize that many car owners would rather give up on necessities like groceries, housing, utilities, or medical expenses to keep their vehicles.

Doomed if you Own, Doomed if you Don’t

Especially for working people, owning a vehicle can seem like a necessity. For some workers it’s just the commute, for others the car is necessary to run a business. In the giga-economy, the car might become the business (food and package deliveries, ride-hailing, ride-sharing). This makes the high price of owning and operating a car ($2 per mile, >12,000 per year) also a huge burden.

Of course, marginalized people don’t get a break here either. New-car loans are often denied, and for the last few years, even the used-car market had overblown pricing. That left many with even lower-quality choices, requiring more money for maintenance and repairs.

The Solution has to come from C/CAG

Transportation Equity would address many of these issues, like giving people a chance to increase their retirement savings. Unfortunately, Bay Area politicians seem to have an allergy to Transportation Equity. If there is a vote to increase asthma in children, few politicians in this county have the backbone to do what’s right and vote against it.

The only possible solution to this dilemma of high cost of ownership and low percentage of retirement-ready savings has to come from C/CAG, and they are literally sleeping at the wheel. This is the organization in charge of “issues that affect the quality of life in general, transportation, air quality, …” And yet their car-focused developments are sabotaging the very things they are pretending to fix.

Their Public Transportation agencies are wasting as much money as possible on real estate deals, electrification, experiments, political dysfunction (e.g.,Dumbarton), more highway widenings (e.g., Dumbarton Bus Lanes,) future failing projects (Ferry Service) – all while increasing childhood asthma, increasing childhood diabetes, cutting services, and daring to claim a “Fiscal Cliff” is coming. For many years, C/CAG showed little interest in simple things like providing synchronized schedules, Safe-Routes-To-School (SRTS), Safe-Routes-To-Transit (SRTT), simple bus shelters, or safe bike parking.

When longtime council members like Mayor Jeff Gee (SamTrans, Caltrain), Alicia Aguirre (C/CAG), or Diane Howard (Safe-Routes-To-School) want to brag about their records, let’s just point to C/CAG’s failures instead.

“Nobody who wants to do good, could be that bad at it.”
[Zarathustra]

Post.Scriptum.

You might ask: “Who is this C/CAG you are talking about?“
A: Nobody knows. They claim to be in charge of our quality of life here. And for one am willing to take them by that claim. But apparently, not even their members know about that quality-of-life thing. If these C/CAG members understood just these three numbers:

• 92% of households own cars
• 60% of households own bicycles
• only 8% of retirees are set up for retirement

they would know what they should be doing to improve quality-of-life, health, and retirement savings for everyone.

Enjoy your Labor Day!

Editor’s Note: The views and opinions expressed in all blog posts are those of the authors and do not necessarily reflect those of the Redwood City Pulse or its staff.

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