Retirement Blog

Finance Blogs » Retirement Blog » No rush to buy a retirement car

No rush to buy a retirement car

By Jennie L. Phipps ·
Tuesday, January 11, 2011
Posted: 4 pm ET

I put on my reporter hat yesterday and covered the North American International Auto Show in Detroit, still the country's largest and most influential car show. If part of your retirement planning includes buying a car to last you a long time, my advice is to hold off for at least a year or two as the industry perfects the fuel-economy advances that have been brought about by the development of electric-powered cars.

Despite the recent release of the Chevy Volt and the Nissan Leaf, electric cars aren't ready for prime time, but they are coming close. And gas engines are getting overhauls that take advantage of electric technology to double gas mileage. Several manufacturers have plans to release next-generation hybrids in 2012 that offer better than 50 miles per gallon.

What makes the difference is the adoption of Lithium-ion batteries as opposed to nickel-metal-hydride. The first generation lithium battery in the Chevy Volt bisects the length of the car and gets in the way of everything. Meanwhile, battery manufacturer Johnson Controls introduced a lithium battery at this year's car show that is no more than one-quarter of that size and fits neatly underneath the rear passenger seats. A full-size car can run 100 miles on it before switching over to gas, and it recharges by plugging into ordinary household power in about half the time that it takes to recharge a Volt.

Another interesting electric vehicle that people planning to live in a quiet area during retirement might consider is Chrysler's line of  electric GEM cars that weigh less than 3,000 pounds, seat as many as five with room for groceries and max out at 35 mph. They cost about $10,000 and qualify for a 10 percent federal tax credit if you buy before Jan. 1, 2012. GEM cars are first cousins to golf carts, but they are fully enclosed, heated and air conditioned, and would do fine as a second car for people who need something for running errands in an area without high-speed traffic. They meet the federal crash-test safety regulations for those kinds of usages.

A third option is a kit that adds electric power to an existing gas vehicle. A number of small companies have developed these and are selling them to fleet owners -- companies that rely on a truck as big as a Ford F450 can buy a kit that will up gas mileage from the current 4 or 5 mpg to 50 mpg. Right now, the conversion cost is too high to be practical for drivers of ordinary cars and trucks, but the price will undoubtedly fall.

Any way you look at it, cars are getting more fuel efficient and more comfortable, so you'll probably be sorry if you rush out and buy yesterday's technology.

Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.
February 18, 2011 at 7:11 pm

In 1970 I reinlisted on Active Duty and bought a Dodge Challenger SE with a 383 V8 Engine. Needless to say at that time gas was 40 cents a gallon and the speed limit was 75 across the country. Now I drive a 1989 Honda Civic LX that still runs great, but certain parts must be replace since the car is 22 years old. Oh! How I miss the 70's...

Peter J. Evans
February 03, 2011 at 12:00 am

I had a 1970 dodge challenger with a 6 cylinder 1 barrel in 1982 that got 37 mpg average for city/highway. My 15 year old 1975 honda civic hatchback got 49 mpg on the highway in 1990. There has been a severe decrease in average mpg for the past 20 years.

These electric cars are alot of talk with nothing to support buying one. Worst gas mileage, 20 times more things to go wrong, no one wants them, no need for them, no reasons to buy one, less safe in accidents, expensive batteries that will need non-stop replacement for the life of the vehicle, low power, more expensive to fix when broken, increased number of breakdowns, use dangerous chemicals in batteries, battery failure explosion would kill the passengers, require new outlets to be mounted at your house, no place to charge if you live in an apartment, forced tow if you ran out of power on the road, unable to use in an emergency if battery power is low (everynight situation), cost more at initial purchase, no mechanics outside of dealerships to repair them, no parts available at auto supply stores, heavier weight and less cargo room, drastically lowered tow capacity so no real boats, or travel trailers, or towed power equipment will occur. Probally 100 other things making this an awful, foolish purchase, but I only have had 4 minutes to think about this nonsense.

February 02, 2011 at 4:16 pm

Assuming an electric car in my future is blasphemy.

January 18, 2011 at 7:19 pm

To Chevy: Don't tell me how much the Volt cost. Give me info. like how long the batteries last and how much they cost to replace.
The GEM sounds dangerous. Someone will take it where it doesn't belong and the result will be a severe case of "road-rage".
I may consider a 2011 model of an Amish Horse and Buggy (with air bags).

January 18, 2011 at 12:48 pm

100% incorrect info. It it the time to buy a safe heavy vehicle now before they are banned. Just bought a new Escalade (5800 lb. curb weight). Would not touch a tin can electric car.

Jack Norris
January 18, 2011 at 3:06 am

The numbers just don't add up for an all electric vehicle - capital, range (hours)top the list. We expect a car to be "in service" 24/7 and a very low battery after a day's use could be very inconvenient if, say, an unexpected trip became necessary. Right now, we can only guess about trade-in values. An electrical problem almost surely means a tow into the dealer for diagnostic work. I'm an environmentalist, but just like wind and solar power it looks good until you start doing the math and also realize that it's a part-time fix in a full-time setting. I do allow, though, that an all electric vehicle should do well in a short trip urban environment. Then again, wouldn't a bicycle do just as well? The bottom line is that, for right now, all we have is a lot of hype. I'll wait and see.

End the Ponzi Scheme
January 12, 2011 at 10:35 am

Apparently you completely missed diesels at the show. I already get 45MPG in town, and roughly 50-55MPG on the highway. They don't cost a fortune for little to no performance, last forever, and don't depreciate like gasoline powered cars of the same model. Why buy something with unproven, buggy technology, when you can get something equally economical, using 5-10 year old technology, and 100s of thousands of cars already using it around the world?

Right, you wanted to be green. Let's just ignore how those batteries come into existence.

The golf cart idea is interesting, although impractical. I live in the city, but after reaching the end of the neighborhood street, it's 45-55MPH roads, in town. You literally can't get across town staying on roads <35MPH, and yes I've looked at google maps, and the way you get from one block to another is on the main interconnecting streets, which are 40-45MPH, every one of them.

Ernie Zelinski
January 12, 2011 at 2:33 am

I can assure you that my friend George who buys older cars at auctions will get a lot more value than anyone buying a new car of any type - hybrid or otherwise.

George buys cars for $400 to $500 at auctions and then runs them for up to 5 years. He has a great eye for cars and ends up putting very little maintenance in them.

Incidentally, George gets around $1,500 in retirement income and typically saves over $500 every month.

So when I read articles such as this, I just laugh.

Rather than buying a new car even for ten grand, place the $10,000 into investments at 5% return and you will receive $500 a year. Buy a $500 car and you will have $500 a year coming in from the $10,000 a year for maintenance. At the end of 5 years, you will still have your $10,000.

By the way, I semi-retired over 20 years ago when my net worth was minus $30,000 (due to student loans). Since then I have worked less than 4 hours a day and I will be fine in retirement, better off than 80 percen of baby boomers. Of course, 90 percent of financial advisors will say this is impossible. But as someone once said, just because you think something is impossible, at least get out of the way of the person who is doing it.

Ernie J. Zelinski
Author of “How to Retire Happy, Wild, and Free”
(Over 125,000 copies sold and published in 9 languages)
and “The Joy of Not Working”
(Over 250,000 copies sold and published in 17 languages)

Tom French
January 11, 2011 at 8:50 pm

I have a GEM that I drive in Hermosa Beach, CA. I leave my red sports car in the garage for special occasions and drive the GEM all around the neighborhood. Then, when I get home, I plug it into a regular wall outlet and it's ready to go the next day. It's probably not cost effective for me, but as a toy it's much more useful than a boat.