# How much can I save if I don't own a car? A worked example comparing car to pension

I don't drive and I've never enjoyed driving. Moreover my eyesight is very poor and I fear I may be a danger on the road. However, some 'friends' and family don't get this, so I want to show a calculation of how much more money I save in a pension by not driving. Here is my calculation:

Assumptions:

• £3,000 cost per annum (present day terms) to run a car
• 7% interest from a pension
• 20% basic rate of tax, for tax relief
• Number of periods investing into pension: 44 years

Calculations:

• There is a cost saving from not having a car. This is 44*£3,000 = £132,000
• There is interest from the pension: £3,000*1.07^44 = £58,885
• There is tax relief, i.e. pension contributions are not subject to income tax. This is 0.2*44*£3,000 = £158,400

Total this up gives an additional £349k for retirement.

My question is, is my calculation correct?

• The premise of the question is a bad idea. If you're not driving because you don't want to, then don't try to create an argument that you're doing it for financial reasons. It won't be true, and at some point the argument is going to fall apart because of that. (e.g. "Well if you're not driving to save for retirement, then why are/aren't you doing this other thing that wastes/saves money?") Commented Aug 25, 2019 at 13:50
• A better solution to your predicament would be achieved by talking to you family/friends more about the actual reasons you don't drive, or finding some other solution to them not udnerstanding you (ideally a better solution than "ignore them", but if need be ...) The InterPersonalSkills StackExchange might be a good place to ask for suggestions of how to deal with your actual problem (rather than this XY-problem) Commented Aug 25, 2019 at 13:53

I have no idea (I am in the US) if those numbers make sense. The biggest thing I see missing, is you aren't looking at the expenses you do have even though you don't drive.

You are likely to have above average expenses for public transportation, traditional taxis, and gig taxis. You may pay for gas when friends drive you places. Of course if you are constantly asking friends to drive you, and not paying them; you don't want to point out that every time they drive you their contribution makes it easier for you to retire.

Regarding the expenses you do mention: In your £3,000 cost to run a car, does that include insurance? Did that include the cost of parking?

• I would make this even stronger. There are expenses that the OP will have BECAUSE s/he doesn't drive. Public transit &c, of course, but also things like delivery charges for ordering on-line. There's also potential lost opportunity costs, e.g. being limited to jobs that can be reached without driving. Commented Sep 6, 2018 at 17:00

I think the easiest way to calculating the amount would be to compare values you know (because I assume you are already spending that money).

So sum up public transportation cost (only tickets you buy regularly, without vacation tickets and occasional ones), taxis, ubers, annual bike repair costs. Any spending on moving from point A to B that are regular to you and can be planned. Maybe your bank have such feature.

Then compare that value to advised 20% of income people should spend on car payment and all other automotive expenses. Don't go into tax details, interest rates and so on. Just take those 20% of your monthly income and see what's the difference.

And that difference could be your savings.