Driving

The cost of driving: What to expect in each decade of life

hero image

The cost of driving can vary significantly throughout life. When you first get your license, you’re likely to be grateful to get any car with four wheels and a working engine. But as you age, earn more and potentially start to grow a family, things will inevitably change. You may need a different car with a great focus on safety. And the amount you pay for auto insurance premiums will also fluctuate throughout the years, especially when compared with the size of your salary. 

We looked at multiple data points to find how driving costs change as drivers age:

Analyzing the costs of owning and driving a car based on your age helps you figure out what to expect in the near-term while also financially preparing for future stages of life

Driving in your 20s

Drivers in their 20s are finishing college and entering the workforce. From a financial perspective, they’re likely starting out with entry-level salaries. Between the ages of 25 and 34 years old, the average salary is $47,736. And unfortunately, despite having lower salaries, younger drivers experience the highest annual premiums for car insurance, which average $1,887 for 20-somethings. That eats up nearly 4% of the average driver’s pre-tax income.

The good news is that this age group has the lowest amount of auto loan debt compared to other decades. Collectively, Americans in their 20s owed a total of $3 billion on auto loans in 2017. So even though insurance costs are higher, car payment costs don’t put as much a strain on budgets as they do for other age groups.

Another interesting factor that could impact the cost of driving for this age group is support received from parents. Only 24% of American young adults consider themselves financially independent by the time they reach age 22. And 45% of those between ages 18 and 29 say they get financial help from their parents — which could change the true impact of driving costs for those in their 20s.

Cost at a glance:

Average annual auto insurance premium: $1,887

Average salary (25-34 year olds): $47,736

Insurance costs as percentage of salary: 4%

Collective auto loan debt for 20-somethings: $3 billion

Driving in Your 30s

Auto insurance premiums start to drop in the 30-year old range, especially compared to drivers in their early 20s. The average annual premium is just under $1,450. Plus, this age group sees a major salary jump compared to the previous decade, with the average salary at more than $59,000. The difference from a budgetary standpoint is significant because insurance drops to just 2.46% of total salary. 

Auto loan debt, however, increases greatly for 30-somethings. Altogether, Americans in this age range carry $23 billion in auto loan debt. Part of this could be due to growing families in this age group. For instance, research from The Zebra reveals that on average, a minivan costs nearly $6,500 more to purchase than a sedan. Plus, people in their 30s are likely to qualify for larger auto loan amounts since they earn more.

Cost at a glance:

Average annual auto insurance premium: $1,449 

Average salary (35-44 year olds): $59,020

Insurance costs as percentage of salary: 2.46%

Collective auto loan debt for 30-somethings: $23 billion

Driving in your 40s

The cost of driving starts to become even more manageable for those in their 40s. Salaries bump up a bit to nearly $59,500 a year on average, while auto insurance premiums continue to go down. However, auto loan debt does keep climbing. In fact, according to the U.S. Bureau of Labor Statistics, 45 to 54 year olds spend the most on cars out of any other age group. The annual spend on vehicle purchases is $4,169 — which is almost a $350 monthly payment. 

Another factor to consider when thinking about the more than tripled size of collective car loan debt for 40-somethings is the amount of cars in a household. Teenagers at home may also need a car to drive, which could be one factor in the jump.

Cost at a glance

Average annual auto insurance premium: $1,394

Average salary (45-54 year olds): $59,488

Insurance costs as percentage of salary: 2.34%

Collective auto loan debt for 40-somethings: $77 billion

Driving in your 50s

50-somethings have the highest level of auto loan debt compared to any other age group, totalling $138 billion. On the other hand, this decade of life also comes with the lowest average auto insurance premium, which comes in at less than $1,300 a year. Interestingly, income also begins to drop in this age range, but that could be due to some individuals retiring in their late 50s (or early 60s, which are included in the salary data).

Cost at a glance

Average annual auto insurance premium: $1,298

Average salary (55-64 year olds): $56,680

Insurance costs as percentage of salary: 2.29%

Collective auto loan debt for 50-somethings: $138 billion

Driving in your 60s

Reaching the 60th birthday milestone marks a shift in the cost of driving. This is the decade when car insurance premiums start to creep back up; that new average is $1,315 for 60-somethings. Average salaries for those who are 65+ also begin to decrease, averaging just below $53,000. 

The good news is that total auto loan debt for this age range is also lower. Maybe older individuals are able to pay in cash, or maybe they’ve paid off a significant chunk of a car loan and are cruising down the road with low or no debt.

Cost at a glance

Average annual auto insurance premium: $1,315

Average salary (65+ year olds): $52,936

Insurance costs as percentage of salary: 2.48%

Collective auto loan debt for 60-somethings: $122 billion

Driving in your 70s

Annual car insurance premiums continue to rise for drivers in their 70s. In fact, the average premium jumps more than $200, up to $1,523. And with the average annual income in the low $50,000s, the cost of insurance as a percentage of salary jumps to 2.86% — the highest since the 20-somethings. 

Drivers in their 70s also face challenges with keeping their licenses due to changes in vision and eyesight. Fatal crash rates start to increase with this age group, according to the Insurance Institute for Highway Safety. License renewal requirements vary by state. Illinois, for instance, has one of the strictest policies and requires those 75 years or older to retake their road test in order to renew.

Cost at a glance

Average annual auto insurance premium: $1,523

Average salary (70-74 year olds): $53,327

Insurance costs as percentage of salary: 2.86%

Collective auto loan debt for 70-somethings: $79 billion

Bottom line

Driving a car can be expensive at any age, but there are some factors that impact what you’ll pay more than others. Age tends to have the largest impact on auto insurance premiums at the bookends of your driving life, especially in comparison to average salaries. Debt tends to peak in the 40s and 50s, likely because of higher spending power and potentially having more drivers in the house.

Don't forget to share!