Train travel and the Tarjeta Dorada

Ten days ahead should be adequate timing to buy tickets if you're not traveling around a holiday. Barcelona-Madrid has lots of service. The Tarjeta Dorada discount is 40% Mon-Thurs and 25% Fri-Sun. But the deepest advance-purchase discounts might be 60% off when they first are offered, usually a couple of months in advance. Full fare is over 100 euros per person in 2nd class.

Whether a car is useful depends on which small towns you decide to visit. The train will get you from Barcelona to Madrid much, much faster than a car. Train: 2-1/2 to 3-1/4 hours; car probably over 7 hr., and that doesn't count time dealing with the car pick-up, stopping, finding parking, etc. There's good transportation from Madrid to Toledo, Segovia and Cuenca, just to mention three of the great side-trip options from Madrid. For Cuenca, it would be essential to plan early and go ahead with the ticket purchase (nonrefundable and nonchangeable though it may be), because even with the Tarjeta Dorada, you'd probably find last-minute ticket way too costly to justify for a day-trip.

There are smaller and/or less touristy towns reachable from Madrid as well. You can probably get anywhere you've ever heard of by train or bus, as long as the places aren't too far from Madrid (or Barcelona for that matter). Outside Madrid I liked the university town of Alcala de Henares with its beautiful historic district and the smaller town of Chinchon. I'm a huge fan of Girona, which is north of Barcelona.

Forget about the Tarjeta Dorada. The discounts are greater if you buy in advance with Promo Fares at www.renfe.com (Tarjeta Dorada discount 25-40%, Promo 70%).
Buy as soon as the tickets are available online from Barcelona to Madrid. The best Promo fares get sold out quickly, so it is better to buy now, and forget about senior discounts.
Drive from Barcelona to Madrid is mad. Super long journey, tolled and why do that if you can use the AVE, that only takes 2h 30 min? Apart from being a nuisance a car in major cities in Spain (parking is expensive in Barcelona). If you want, stop with the AVE at Zaragoza to visit it. But I wouldn't rent a car. Totally crazy.

... to add on the sense of "urgency" that Joan has imprinted... the fast train line BCN-MAD is one of the most heavily used, with over 3.8 million passengers just last year.

Thank you for all the helpful information. I think AVE reservations are available about 120 days in advance. Is that right?

When I go looking for schedules to respond to inquiries here, I do fairly often see "train full" notices for the Barcelona-Madrid run (or vice versa) and for the Madrid-Seville run (or vice versa) for the current day or following day. I've never seen anything like a whole day of sell-outs, but for a tourist on a tight schedule (which is most tourists), not being able to book a departure between 8 AM and 1 PM on the desired day could be a rather big deal. But the best I can tell, except perhaps when a key holiday is involved, the main reason to buy tickets way in advance is to snag a great fare.

It's easy enough to monitor the Renfe website for your tentatively-planned travel date, watching what is happening to the fares and ticket availability on all the trains.

To compare prices . . . on the renfe site, when you input your date and route, a little farther down you can check the "tarjeta dorada" box. The cheapest price will come up for each train. To see all the prices, you can drill down on a specific train to a drop-down menu for prices.

Tickets generally go on sale 62 days in advance but Renfe is erratic. Sometimes tickets will be available 3 months or more in advance, sometimes only a week or two ahead - even for the same day.

I've rented twice in Andalucia with diferent pick-up and drop-off locations and no drop-off charge. Check the online rental prices and compare Madrid/Madrid to Madrid/Barcelona.

If you want to be spontaneous you can get Barcelona/Madrid tickets even a day or two in advance, probably same day too, as there are plenty of trains. If you are concerned, check the website for availability in June/July for same day or next day trains. That should give you a good indication.