This blog accompanies Episode 14 of The Retirement Oasis Podcast. To listen to the podcast, you can visit your favorite podcast platform (Apple, Stitcher, Podbean, etc.) or go here:
We continue this series on what for many can be one of the most fulfilling aspects of retirement – travel. In our prior Episode 13, we covered some of the fundamentals on travel in retirement, including why “travel” is different from a vacation and why it matters. We also reviewed the differences of travel in retirement, including the ability to engage in slow travel, the need and ability to travel with those outside of your immediate family, and the many more things we can engage in while we travel in retirement. In today’s episode, we will review planning ideas – both financial and logistically – for travel in retirement. We will also review other key tips, including how spouses should view travel, how your goals for travel can impact your home (and vice versa), and why carpe diem should be the rallying cry early in retirement.
Retirement Travel Costs: Reap the Benefits of Planning Ahead
Planning ahead for your travels in retirement is critical. The more you plan ahead, the better you will be able to position your finances to meet your travel dreams and the better you will be able to leverage your financial situation and have confidence in your travels.
Understanding the costs of your travel in retirement and making it part of your budgeting and overall planning is important. I have found that near retirees find it hard to predict how much they will need to spend on travel. I believe the main reason that it is difficult to predict the travel budget is that most people planning for retirement really don’t take the time to envision what that ideal retirement looks like and certainly don’t take that next step to budget this out. It seems that many still think of travel as they did while working: a week here, maybe two weeks there. On the flip side, and to be fair, the reality is that it is hard to know where you want to spend your time in retirement and how travel fits into your overall plans.
Nevertheless, it will be important to understand the potential costs. According to Motley Fool, 40% of retirees are spending more than they anticipated on retirement and travel is one of those reasons.1 The budget for travel ranges, anywhere from $0 for those that don’t travel to $50,000 or more for global travelers with higher tastes. According to Motley Fool, the average is a bit over $11,000 (2021).
Rather than looking at averages, you really need to do decide the extent and manner of your travel. Only with that starting point can you then begin to formulate potential costs, and this can then help you prioritize your travel goals. Only with proper clarity on the costs of your ideal retirement travel will you likely be willing to travel to the extent possible.
I have found that many retirees don’t plan to do certain things because they are really uncertain of the impact on their finances. So, take time to truly understand what is ideal for you and what your finances allow. Only then can you travel with confidence. There are a few points to consider when budgeting for travel.
- Budgeting and financial modeling. Regarding your budget, the extent that you want to travel could significantly impact what you should be saving in pre-retirement. Moreover, doing a lot of adventurous travel for long periods of time might accelerate your target retirement date which obviously impacts your required annual savings. As discussed above, understanding the costs, and doing financial modeling to understand the travel possibilities can provide the kind of freedom you need to live out your travel dreams.
- Avoid duplication of expenses. Remember that for budgeting purposes that some normal expenses can go away or be replaced by similar expenses when you travel. For example, food costs will not be duplicated when you travel, but they may be a tad higher. If do you travel for an extended period, perhaps you can reduce your utility expenses or other similar expenses as you travel. This is important to consider from a money-saving standpoint and a budgeting standpoint.
- Watch frugality. While it is important to budget and look for ways to stretch the dollar for retirement, you should not be so focused on cost that you take the enjoyment out of travel. This is where understanding your overall financial plan and your resources come into play and living out your values in coordination with your finances.
I have seen countless individuals do a great job of saving for retirement by living a relatively frugal lifestyle, but they cannot get in the habit of spending money despite clear indication that their resources allow them to have a certain budget for travel. If this is you, take a step back and ask yourself what you truly value. Do you value experiences and relationships, or do you value the size of your portfolio?
Cost-Saving Tips for Retirement Travel
If travel is an important part of your retirement, looking for ways to save money will allow you to travel more or travel longer. While you don’t want frugality to rue the day, being smart about travel can allow you to obtain even more fulfilment from retirement travel. We will touch on just a few ideas as this subject can alone be its own podcast.
Planning the logistics of travel and being flexible. As transportation costs can add up, it will be important to plan the logistics as you travel. Traveling during your working years might have been a bit easier. You had to fly to one place and do minimal traveling within that city. Having flexibility to not have to return to work or the ability to engage in slow travel can provide needed flexibility and lead to cost savings. During retirement, your time and budget may allow you to engage in more full trips. Slow travel, or not having a firm start and end date to your retirement, may create significant flexibility to allow you to not only experience the world differently, but perhaps save money in the process.
For example, you may want to visit multiple locations within one region on one “trip”. Since you are already going to the expense and time to reach a far-away destination, take advantage of that sunk cost and visit other cities or parts of the region that are of interest. On average, traveling to the destination is about 35% to 50% of the cost of the whole trip and you can spend 1 – 2 days of travel for domestic trips and easily 2 days or more on international trips. For example, if you always wanted to visit Washington and Oregon, perhaps you extend your travels and see Yellowstone in Wyoming and Glacier National Park in Montana. (Ok, yes, that is indeed a big trip.) Or, if you want to travel to China, add Japan and other Asian countries to the list. With expensive overseas flights ranging from $1,500 to $5,000 per person, it is good to minimize the number of such flights that you must take, obviously.
This also suggests that you understand all your bucket list areas of travel so that you can optimally plan. The need for planning will vary based on your time and cost budget, but planning can certainly increase your overall efficiency in traveling.
Be willing to travel in budget areas or budget countries and during budget seasons. Sometimes, the best experiences can be found away from the popular touristy destination cities. I’m not saying you have to travel to Indiana rather than Rome, but you might want to get creative when traveling overseas especially. (I can say that since I am from Indiana and still regularly visit family and clients there.) Perhaps traveling to Thailand may provide a richer experience than going to Tokyo, for example. If the U.S. and/or global economy is in a slowdown, as it is, you may find some great bargains.
Focus on experiences and not things. As Mark Twain said, we will be disappointed in the things we did not do. Life fulfillment is not about material things so it is wise to budget on experiences – not only when you don’t travel but during traveling. While many experiences will not cost money, you might have to be willing to spend money on certain experiences. If you can avoid buying the travel trinkets or perhaps overpriced restaurants while traveling, your dollar will go farther in helping you gain more experiences.
Of course, look for senior discounts! You’ve gotten here so take advantage of it. AARP obviously has some affiliations that offer discounts. Some airlines give seniors discounts. Of course, there are a plethora of internet sites that discuss these discounts, including Upgrade Points.
Traveling during non-peak times and be flexible. Traveling during non-peak times such as February, April to May or September and October may offer better rates. Certainly, being able to fly non-weekend days may help minimize the costs on travel. Look for apps that can help you find the discount travel periods, including ones such as Google Flights. In addition to looking to travel during non-peak times, finding ways to travel last-minute may provide discounts. There are ample websites that focus on finding these deals.
Use travel rewards where available. If you are indeed traveling a lot in retirement, looking for travel rewards can pay off. Just like with buying anything on sale, you want to be smart about it and not just assume going the rewards route will be the most economical in all cases. You will want to study your options a bit more and plan accordingly, as discussed on many sites such as The Balance Senior Travel Article, The Points Guy, and AARP. Of course, be careful of any conflicts when looking at these internet sites – they often get paid to promote products so do your homework.
Home Considerations When Traveling in Retirement
Your Home - A Financial Resource in Retirement. Using your home as a financial resource may also allow you to engage in more extensive travel. Renting your home for short or long periods may provide additional income, and that is obviously much easier done in today’s environment. (If you do plan to do that, you need to, of course, confirm that your housing community and local regulations allow you to do so – this is another reason to fully plan out of the ramifications of your decisions.)
Another choice you have about your home is to downsize. Downsizing can provide additional resources to travel. You might pocket some profit by selling your current, larger home and buying a smaller, less expensive place. Also, you regular maintenance and utilities might be less. Another idea behind a move is what is called ‘lock and leave.’ If you live in a condo and don’t have any yard to maintain, you can decide to make a last-minute trip, pack your bags, walk out the door, and go. “Lock and leave” means you are greatly reducing the hurdles you have to clear in order to start your trip.
Some retirees use a relative’s home as their base home while they travel. Perhaps there is an in-law’s quarters of either their parent’s home or their kids’ home that could allow them to live independently while they are there, but lock and leave when they travel.
Even more extreme, you could sell your home if you plan travel intensely. As we will discuss below, selling your home to move to a different part of the country or world to experience another location more fully might be the right move in your situation. You could sell your home and buy your home at a different location.
Or you can sell your home and be a vagabond. The idea here is to not have a permanent home and globetrot across the globe, seeking new adventures in a somewhat spontaneous manner. This is growing in popularity, and there are plenty of adventurous couples that share their experience and provide practical tips online, e.g., Earth Vagabonds, Senior Vagabond Travel.
Other Considerations for Extended Travel in Retirement
As you consider what your ideal travel looks like in retirement, you also want to consider the unique issues related to extended travel in retirement. You will want to consider what length of trip fits your needs and abilities, the impact and considerations of health issues during extended travel, and how taking a break from extended travel can allow you to more fully take advantage of what this type of travel can offer.
Is extended travel practical for your situation? You should first consider whether extended trips are right for you. Being able to travel for extended periods of time (i.e., more than two weeks) can be one of the joys of traveling in retirement. There are a host of issues to consider when doing extended traveling, of course.
The maximum length of the trip that one can handle varies considerably – some say 4 weeks is max (especially if overseas) while other say 5 months is about the max. How long you travel will be impacted by other factors and will also impact other decisions.
If you have obligations at home such as caring for parents, grandkids or even kids, then your travel may be a bit more limited. This is where planning can really help. Not only is it important to look for ways around these obstacles, but planning your travel years in advance might help you formulate a good game plan as to when you can do more extensive traveling despite these potential concerns.
For example, if you are not currently having to help care for relatives or don’t expect to have that obligation early in retirement and yet may have that obligation later in your retirement years, then you may want to engage in more extended travel early in retirement.
Health issues and the impact on travel in retirement. Health issues are another factor when considering extended travel. While a lot of health issues and disabilities can be overcome with the proper planning and determination, you can generally enjoy travel more with better health. This is yet another reason to travel early in retirement while your health allows as well as a reason to live a healthy life so that you can enjoy travel more fully.
There are also practical considerations regarding health issues. What will your health insurance cover? Do you need to see certain doctors regularly? How long can your prescriptions last? I have heard of some limiting their travel to 90 days because that is the limit of their prescriptions.
Taking a “mini-vacation” during extended travel. As noted earlier, on long trips, you will want to have a break from heavy travel. You will want to take a vacation from your “traveling,” and the respite might be as simple as staying near your hotel and eating at nearby cafes. I have heard many people say that they don’t want to go on extended trips because it would wear them down, but they often forget that they can take time to catch their breath.
There are many other issues to consider as well, including maintenance of your home while gone, pet issues, volunteer commitments, important family events, spending an adequate amount of time in your faith, financial commitments, how to handle emergencies, etc. While there are many issues to consider, we would suggest that you do not let any one of these be an obstacle. They merely present opportunities to plan for and overcome.
Other Considerations of Travel During Retirement
There are many other considerations for traveling during retirement, including the need for spouses to be flexible, the fact that you will experience different seasons throughout retirement, and the need to plan three to 10 years in advance for retirement travel.
Be flexible with your spouse’s desires. As couples contemplate traveling together, you may need to come to a compromise on location, activities, and duration. Maybe you want to stay put for a while and your spouse wants to be more active. So, find a home base in another place and each of you can do your own thing while there. In some cases, you may even agree to let each other go on solo trips or trips with friends while you do your thing, as discussed above. Creating space for each other in retirement is important, and having that space for travel can be especially meaningful for those in a relationship.
You may go through seasons on how you travel. In the early years, you may be more focused on adventure travel or travel that is more physically demanding. As you age, you will not be able to do as much physically so the Machu Picchu hikes will be minimized. As you age, you may more fully embrace the enjoyment of sitting at the café a bit longer and meeting new friends at that café. As I heard someone else say, do you want to “see stuff every minute, or do you want to enjoy every minute.” (That is an important concept at any stage in life, of course.) Since you will go through seasons on how you travel, planning will be critical. What is on your bucket list? What adventures do you want to pursue? What is your budget? And, perhaps more importantly, what is your time frame.
As we discussed, you will have your go-go years, your slow-go years, and your no-go years. Assuming there is no travel in your no-go years (other than watching Rick Steves on the tele), how is the travel divided up in your go-go years and your slow-go years? Understanding your time and money available will be critical to lay this out in the most efficient manner. That’s not to say that you should not spend time on the beach during your go-go years as we all need some respite, but waiting to take that long boat excursion should perhaps not be put off too long.
Impact on your overall planning and the need to plan. While we have touched on the need to actual plan your retirement travels, let’s circle back to this concept based on some of this framework that we laid out. I would suggest planning your ideal retirement travel should be done ten years before retirement. Your ideal travel goals could impact many aspects of retirement, including your budgeting and savings, your desired place to live in retirement, the extent that you do any part-time work or volunteer work in retirement, your investments, how you define the stages in your retirement, and many other planning issues.
Your travel goals might also impact where you plan to live during your retirement, whether it is for a short period or longer duration. You might find that moving to another state or country may allow you to better fulfill what you are looking for from travel. For example, if several South American countries are on your bucket list and you really like certain aspects of a country’s culture, perhaps this would suggest that moving to a South American country for a short (or long) period is in order. Selling your house in the states and living in a South American country may not only be the kind of fulfillment you are looking for, but it can be much less expensive. It certainly could be less expensive than making multiple flights from say Nashville to Colombia, Argentina, and Brazil. Or, establishing a home base in in Phoenix, Portland, or Boise may be in the cards if you have a deep desire to experience what the West has to offer.
Of course, this extreme form of travel –moving across country or to another country – is not for everyone. Perhaps you just need a few years in that type of setting, but it could provide the immersive experience you are looking for. Living in one location over the short-term may be a good compromise.
Planning retirement travel for tomorrow may also improve your fulfillment today. As you plan your travels in retirement, you can also evaluate how you are living today? Do you necessarily have to wait to do certain trips while you are retired? Perhaps you have more flexibility in your job than you had when you were younger or perhaps a sabbatical is an option for you. Beginning to envision your ideal life tomorrow may encourage you to live more of your ideal life today.
Of course, as you get closer to that retirement age, you can get more granular with your planning. I would suggest that three years before retirement that you have a pretty good bucket list of places to see, an idea of what your travel seasons look like – both during the year and across years, your budget for travel, an idea of who you want to travel with, and ideas on how your travel goals will impact your home. Putting the proper planning in place will not only allow you to travel with confidence, but it will likely lead to optimal and cost-effective ways to travel.
1 https://www.fool.com/retirement/2018/02/02/almost-half-of-retirees-spend-more-than-expected-o.aspx. Brockman, Katie, February 2, 2018.