Can We Afford the Boat?
Every retirement tool I have used is happy to tell me about Roth conversions and completely silent about the boat. Which is strange, because nobody has ever lain awake over a Roth conversion, and the boat comes up every spring.
The reason, I think, is that the boat feels like a budgeting question and budgeting apps treat the future as a spreadsheet you will update later. But a $48,000 purchase in eight years with a loan and an upkeep bill is not a budgeting question. It is a plan change, and it belongs in the plan.
Start with the one everybody gets wrong
The price is not the cost. For anything with an engine or a roof, the annual running cost is the number that decides the answer, and the long-standing rule of thumb for a boat is 10% to 20% of the purchase price every year, before the loan payment — slip or storage, insurance, winterising, fuel, the annual service.
On a $48,000 boat that is $400 to $800 a month. I used $400 in everything below, the optimistic end, because I would rather be accused of underselling the problem.
Here is that purchase in the mid-career sample household — the Hendricks family, 44 and 42, $163,800 of income, $343 a month of slack. A $48,000 boat at 47, $8,000 down, the rest over ten years at 7.99%:
A household with $343 of slack takes on $953 of cost. Six hundred and ten dollars a month short — not a near miss but a real one, and the kind that does not announce itself, because each piece of it is affordable and the total is not. The answer arrives in about fifteen seconds, and the upkeep is the larger half of it — which is the part the dealer's payment calculator will never show you.
One detail worth knowing: those figures are bigger than the ones you would get on a calculator, because the plan inflates the price to the year you actually buy. Type $48,000 today and a purchase at 47 is priced at about $51,700 in that year's money, with the loan sized on that. You are supposed to type today's price. The plan handles the rest.
The field that mattered most
Then I ran the same boat twice, changing exactly one thing: whether a sale age was entered.
Two hundred and ninety-three thousand dollars, from one empty box. Because a running cost with no end date runs to the end of the plan: thirty-five more years of upkeep, from 57 to 92, inflating the whole way, drawn out of a portfolio that is funding a retirement.
Do not read the first row as "the boat made money". It is flattered by a limitation in my own engine that I will come to in a moment. The number to take from that table is the gap between the two rows, and the gap is upkeep you never stopped paying.
The same thing happens with a car, and more quietly, because people do not think of a car as permanent. A $18,000 used car when the eldest turns sixteen, $280 a month of teenage-driver insurance and fuel, sold at 57: $2,509. The identical car with no sale age: $161,772.
So: fill in the box. Whatever you actually think you will do — sell it, hand it down, replace it with another one, let it rot behind the garage — is a better input than leaving the plan to assume you keep paying for it until you are ninety-two.
Where my own number is wrong
I would rather show you this than have you find it.
The projection only draws on accounts once you are retired. During the working years it does not fund a deficit out of savings, because what a household does with a shortfall is a decision rather than something an engine should guess. That is defensible, and it has a consequence I do not like: a purchase financed and fully paid off before retirement, with no ongoing upkeep, registers no long-term cost at all.
A $45,000 kitchen renovation at 46, $10,000 down, the rest over seven years at 8.5%, costs the household $582 a month for seven years. Its effect on the portfolio at retirement, and at 92, is exactly zero. Not small. Zero.
It is not zero in life. Those payments come from somewhere, and the somewhere is either savings that did not happen or a balance that was drawn down. The honest version of that sentence is that I have not taught the engine where, so it charges nothing.
Which means the two columns should be read differently for a purchase:
The monthly column is the answer. "Can we afford this" is a cash-flow question and the panel answers it correctly: take-home, spending, what is left, read at the date the purchase actually happens. For the boat that is $953 a month against $343 of slack, and that is true.
The horizon column is a floor, not an estimate. It charges you properly for anything that reaches into retirement — upkeep with no sale date, a loan running past your retirement age, cash taken out of a funding account — and it under-reports everything confined to the working years. When it says a purchase costs you $258,879, believe it. When it says a purchase costs you nothing, it means "nothing that I model".
It is on the list. Until it is fixed, the way to make the horizon number honest on a working-years purchase is to say where the money comes from: name a funding account on the form, or add a Savings Change that reduces a monthly contribution by the payment. Then the plan is costing a decision you actually made rather than one it invented.
Paying cash is not free either
The instinct, once you see $953 a month, is to pay cash and skip the loan. Worth modelling, because it is better and it is not free:
Paying cash saves the interest, which is the $46,702, and still costs $204,653 — because $51,691 left an account that was compounding, and the upkeep carries on either way. The comparison worth making is not cash against loan. It is purchase against no purchase, and that is a different and much larger number than the one people are usually arguing about.
None of this is an argument against the boat
I want to be clear, because a post full of six-figure numbers reads like a lecture. The output of this exercise is not "do not buy it". It is a price tag with the real number on it, attached to a thing you may well decide is worth exactly that.
Two things it tends to change, in my experience of running it on myself:
When, rather than whether. The same purchase at 52 instead of 47 lands on a household with a paid-down mortgage and fewer years of upkeep ahead of it. Moving the age is one box, and it is usually a bigger lever than negotiating the price.
What it replaces. Nine hundred and fifty-three dollars a month is more than this household’s travel, dining-out and hobbies lines put together. If the boat is the holiday and the weekends, the honest version of the scenario cuts those lines at the same time, and the answer changes completely. Stack an Expense Change alongside the purchase and find out.
Go and price yours
The real app, a finished household, everything unlocked, nothing saved anywhere. Scenarios tab, Scenario Toggles, + Add a change, Big Purchase. Car, boat, RV, home project, wedding, or anything else that costs money to keep. Put in the price in today's dollars, the age you would buy it, the loan, the upkeep — and the age you would sell it, which is the box that matters.
When you want the answer for your own plan, planbend is free to start and never asks for a bank login. If the purchase is a house rather than a boat, what giving up a low mortgage rate costs is the version of this arithmetic with a 7.24% loan in it. And if it is a rental property you are costing, that one has its own trap.