Should You Give up a Car in Retirement?

A "for sale" sign is in the window of an old, bright green car. — (Image credit: Getty Images)

One of the toughest decisions older drivers have to make is when to hang up the keys. For many people, giving up driving means losing part of their freedom.

But while some people have to make the tough decision to give up driving due to issues with vision, reflexes, or other health matters, you may decide to unload your car for financial reasons. As you can see in the table below, over 41% of American households have only one car or none at all. So, for a good portion of the country, having fewer vehicles is a viable option (when it's a choice). And there can be big benefits involved.

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Number of Vehicles	Percent of households
No vehicle available	8.5%
1 vehicle available	33.2%
2 vehicles available	36.3%
3 or more vehicles available	22.0%

Source: U.S. Census.

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The upside of being car-free (or down one car) in retirement

The Bureau of Labor Statistics reports that as of 2024, transportation costs accounted for about 17% of household spending among Americans ages 65 and over. Average spending in that category was $8,172 that year.

But many older Americans report being cash-strapped. A good 59% have concerns about their finances, according to MedicareFAQ. And only 46% agree that they’ve managed to save enough for a comfortable retirement. Unloading a vehicle could free up loads of money in older people’s budgets, especially given the high cost of owning a car today.

AAA reports that, on average, it costs almost $965 per month to own a new vehicle. And while it's not a given that you’re shelling out a similar amount each month — especially if you have a paid-off vehicle or an inexpensive car — you’re probably spending a decent chunk of money nonetheless on fuel, registration fees, maintenance, and insurance.

Speaking of insurance, drivers over age 74 tend to pay higher car insurance rates than most other age groups. Even if you only use your car occasionally, you may be paying a small fortune for auto insurance, which is yet another reason to consider dropping it.

Plus, giving up a car means having one less item to worry about or maintain. If you live in an area where you have to circle around for parking each time you take a drive, there may come a point when you decide you’re tired of that routine.

It’s an especially good time not to have to worry about vehicle maintenance, given recently introduced tariff policies. As Craig Edmonds, President of asTech, explains, tariffs on imported vehicle parts, such as sensors, bumpers and other components, could drive up the cost of these parts. The result? Even routine collision repairs could become more expensive.

Moreover, some of the tools and equipment used to diagnose and calibrate modern vehicles properly also rely on imported components.

"Tariffs can raise those equipment costs, which may be passed down through repair costs," he says.

Is it possible for you to give up a car?

There’s a difference between giving up a car in retirement and being a car-free household. If you’re a two-car household now, giving up one car and sharing the remaining one could be a reasonable compromise. You’ll enjoy cost savings with the convenience of having a vehicle for errands and outings.

But if money is tight and you live in a walkable area, or one with ample public transportation, then going completely car-free could be an option. This clearly won’t work if you’re deep in suburbia or a rural area. But depending on your location, you might have an array of options for getting around. For example, if you only need a car occasionally you could explore getting a short-term rental Zipcar.

Of course, the more travel you can do on foot, the less you’re apt to spend. But even if you have to spring for the occasional rideshare, you could end up coming out way ahead financially. And many cities offer discounted fares for older riders on public transportation.

Let’s say owning a car costs you half of what the average new vehicle owner spends today, or roughly $500 per month. Even if a round-trip rideshare costs you $60, and you take one every week, you’re still ahead by the tune of more than $250 monthly, or $3,000 per year.

Plus, giving up a car might inspire you to walk more and be more active. That could lead to improved health.

Another thing to consider is that some independent living communities offer shuttle services, providing easy access to town centers and other off-site attractions. Giving up a car may be more than feasible if you move to one of these communities later in life, especially if you have access to on-site meal services or grocery delivery.

Finally, if you’re a retiree who travels a lot, that could make the case for unloading a car and falling back on alternative transportation during the periods when you’re home. That could be a combination of rideshares and relying on friends.

Is giving up a car desirable?

Giving up a car and the expense that comes with it in retirement may be doable, depending on where you live and what sort of shape you’re in. (If you struggle to walk long distances, you might need a car in the absence of being able to roam city streets.) But the question is, will it be a benefit — or an annoyance?

There’s an element of freedom that’s sacrificed when you no longer have constant access to a car. And it may require a change in mindset and routine that you’re not eager or willing to embrace later in life.

It’s impossible to consider the day-to-day logistics of giving up a car and what your lifestyle might look like. And also, recognize that if you can afford to have a car in retirement, you may decide to prioritize comfort over savings, which is perfectly fine. It’s when money is notably tight that you may need to push yourself to get on board with alternative means of transportation.

All told, you may find that giving up a car means unloading a lot of your financial stress. And that may be worth some inconvenience.

Maurie Backman is a freelance contributor to Kiplinger. She has over a decade of experience writing about financial topics, including retirement, investing, Social Security, and real estate. She has written for USA Today, U.S. News & World Report, and Bankrate. She studied creative writing and finance at Binghamton University and merged the two disciplines to help empower consumers to make smart financial planning decisions.