For most Americans, a car is the second-biggest expense after housing. AAA’s 2026 Your Driving Costs study, released in September 2026, puts the average cost of owning and operating a new vehicle at $12,863 a year, or about $1,072 a month.
That figure is useful, but it describes a brand-new car driven 15,000 miles a year and financed. Many people over 55 drive less, keep cars longer and pay cash. Their real costs look quite different. And as work commutes end, many couples start asking whether they still need two cars.
What goes into the cost of a car
AAA’s study covers seven categories over five years and 75,000 miles:
- Depreciation, the loss in value, is the biggest single cost for a new car. AAA found a weighted average of $4,422 a year.
- Fuel. Regular gas averaged about $4.15 a gallon at the time of AAA’s study, up nearly 32% from a year earlier.
- Insurance.
- Maintenance, repairs and tires.
- License, registration and taxes.
- Finance charges on a car loan.
How older households actually spend on cars
Bureau of Labor Statistics data shows transportation spending falling steadily with age:
| Age of head of household | Transportation spending per year (2024) | Per month |
| 45 to 54 | $17,184 | $1,432 |
| 55 to 64 | $15,085 | $1,257 |
| 65 to 74 | $11,414 | $951 |
| 75 and older | $6,855 | $571 |
Source: BLS Consumer Expenditure Surveys, 2024 (via FRED). Includes vehicle purchases, fuel, insurance, maintenance and public transportation.
Mileage drops too. Federal Highway Administration figures show drivers 65 and older average roughly 7,600 miles a year, about half as much as drivers in their late 30s and 40s.
A new car vs a paid-off older car
Here is a rough comparison for one person over 55. The older car figures are estimates, since costs depend heavily on the vehicle and where you live.
| Yearly cost | New car (AAA 2026 average, 15,000 miles) | Paid-off 10-year-old sedan, 7,500 miles |
| Depreciation | about $4,422 | about $1,000 (estimate) |
| Fuel | included in AAA total | about $1,110 (28 mpg at $4.15 a gallon) |
| Insurance | included in AAA total | about $2,300 (estimate for a driver near 70) |
| Maintenance and repairs | included in AAA total | about $1,500 (estimate) |
| Registration and fees | included in AAA total | about $300 (estimate) |
| Loan interest | included in AAA total | $0 |
| Total | $12,863 | about $6,200 |
| Per month | about $1,072 | about $520 |
Keeping a reliable car longer, paying cash and driving less can roughly halve the cost of ownership. The trade-off is higher repair risk as the car ages. Setting aside money each month for repairs and a future replacement keeps those costs from becoming a shock.
Costs people forget to count
When people estimate what their car costs, they usually think of gas and insurance. These add up too:
- Tires. A set can cost several hundred dollars or more, every few years.
- Batteries, brakes and wipers, which wear out on schedule whether you drive much or not.
- Parking and tolls, especially for medical appointments in city centers.
- Roadside assistance memberships.
- Car washes and detailing.
- Property tax on vehicles in states that charge it every year.
- The time and hassle of repairs on an older car, which matters more if you have no second vehicle.
Tracking every car-related expense for a year gives the most accurate number. Many people find their true cost is 20% or more above their first guess.
Insurance: the cost that goes up with age
Car insurance is usually cheapest around age 60 and then begins to rise. Insure.com found average full coverage premiums of about $2,274 a year at 65 and $2,410 at 70 in its 2026 analysis, with rates rising about 15% between 65 and 75.
Ways to push back:
- Take a mature driver course. Many states require insurers to give drivers 55 and older a discount for completing an approved course, usually for three years.
- Ask about low-mileage or pay-per-mile insurance if you drive well under 7,500 miles a year.
- Drop collision and comprehensive on an older car when the premium approaches 10% or more of the car’s value each year.
- Bundle home and auto with one insurer.
- Shop every renewal. Rates for older drivers vary widely between insurers.
Should you keep two cars?
For many retired couples, a second car is the easiest big saving available. If a second car costs even $4,000 to $6,000 a year to keep, selling it frees up $330 to $500 a month.
Signs you may be able to go down to one car:
- One car sits in the driveway most days.
- You rarely need to be in two places at once.
- Grocery delivery, rideshare or senior transportation services are available where you live.
- The second car is due for costly repairs or replacement.
Signs you should probably keep two:
- You live in a rural area far from shops and doctors.
- One of you volunteers, works part-time or cares for a relative on a different schedule.
- Either of you has a health condition that means waiting for a ride is hard.
A simple test: for three months, drive only one car and track what you would have spent on rides or rentals to cover the gaps. If it is well under the cost of the second car, you have your answer.
Is rideshare cheaper than owning a car?
It depends on how often you go out. If a paid-off car costs about $520 a month to keep, that covers a good number of rides in many towns. Someone who drives only a few times a week, mostly short local trips, may spend less on rideshare or senior transportation than on owning a car. Someone who drives daily or long distances usually will not. Many communities also offer free or low-cost rides for older adults through the local Area Agency on Aging.
Planning for the next car
Most people who retire at 65 will buy at least one more car. Planning for it keeps it from derailing your budget:
- Estimate when you will replace your current car and what you will spend.
- Save monthly toward it. Setting aside $250 a month builds $30,000 over ten years.
- Consider features that help older drivers, such as blind spot monitoring, automatic emergency braking, a backup camera and seats that are easy to get in and out of.
- Think about whether it should be your last car. Choose something reliable enough to keep for 10 years or more.
If you are in your 40s or 50s
Transportation is usually your second-largest expense right now. Paying off car loans before retirement, and planning to retire with reliable, paid-off vehicles, is one of the simplest ways to lower your retirement budget. If you have teenage drivers at home, expect insurance to fall noticeably once they move to their own policies.
Frequently asked questions
How much does it cost to own a car per month? AAA’s 2026 study puts the average for a new car at about $1,072 a month. A paid-off older car driven fewer miles can cost around half that.
How much do retirees spend on transportation? Households 65 to 74 spent about $951 a month in 2024, and those 75 and older about $571, according to BLS data.
At what age does car insurance go up? Rates usually start rising in the mid to late 60s and increase more after 70, though a clean record and discounts can offset much of it.
Is it worth keeping an old car? Often yes, if it is reliable and safe. Without a loan and with lower depreciation, an older car is usually much cheaper to keep than buying new, even with higher repair costs.
Sources
- AAA, Your Driving Costs 2026 (September 15, 2026)
- U.S. Bureau of Labor Statistics, Consumer Expenditure Surveys 2024, transportation by age (via FRED)
- Federal Highway Administration, average annual miles per driver by age group
- Insure.com, car insurance for seniors, 2026
- Administration for Community Living, Eldercare Locator and Area Agencies on Aging
Cost estimates for older vehicles are illustrative. Your costs will vary. This article is general information, not financial advice.
