There are a lot of old consumers who are looking forward to travel in retirement and in fact, it is all they can think about as soon as they stop working. It seems that they see this as a great reward for all those years of hard work. They just want to maybe dip their toes in the sand and enjoy the beach with a cold drink on one hand and maybe a book on the other.
With this, retirees should know that travel costs a lot of money compared to if they just stay at home and find a way to be productive without leaving their homes. There are some soon-to-be-retiree who might be asking if their retirement fund can rely solely on social security or if they have enough in their other IRA accounts to tide them through their needs.
If you also dream of being able to travel when the time comes that you retire, you need to start preparing for it financially. It is not a walk in the park and you just need to take a look at how you plan your trips now that you still have a job. Apart from the time that you need to take-off work, you also need to invest on that trip with plane tickets or gas money, accommodations and even funds for activities.
A recent Gallup.com survey revealed that a lot of people expect to retire at 65 years old. This survey can be a great barometer of how far along you are with your retirement plans if you are still unsure of when you will retire. This can help you check on the level of retirement fund that you have and if the amount you are saving is on track.
Getting the retirement funds ready for travel
A NYTimes.com article shared that there was a 3.3% increase in retirees who traveled abroad from 1993 all the way to 2012. If you are looking to travel in retirement, here are some of the things that can help you financially prepare for that goal.
- Retirement planning starts early. If you plan to retire at 65 years old just like what the New York Times, you don’t prepare for it at age 60 not even 50 years old or even 40 years old. You need to prepare for retirement as early as possible. This helps you take advantage of the power of compound interest.
- Understand how age affects travel. When you are still preparing for retirement, you might not yet see how your age can affect your desire to travel. There are years in retirement where all you want to do is to travel and you should because time and age is on your side. Then the time will come where you will slow down and might take fewer trips over the course of the year. And the time will come where you will completely not travel anymore due to several reasons like age and health. You need to understand that the amount you used to allocate for travel can slowly go to health and other medical needs.
- Consider inflation when planning for costs. One of the basic idea of saving and investing is that your returns should be more than the inflation otherwise, you are losing money over time. When you are planning for retirement, you need to incorporate inflation cost and this goes for travel as well. Look at inflation activity for the past years and look at projections as well to map out how much you need to have at a certain point to beat inflation.
- Look at downsizing to save on costs. Retirement downsizing can help you trim down your expenses even more so you can divert more funds to travel. This can start with downsizing your house where you can save the most money. But this is easier said than done because if you cannot time that new house with the one you have, you might end up with two mortgage payments. A smaller house can lower down your mortgage payment (if you will not pay for it in full from the sale of the first house), utilities expense give you an easier time maintaining a smaller house.
- Look for off-peak season booking. It is no secret that travel prices go down during off-peak season. From plane tickets to accommodations and food and even expenses for several activities in the areas, they become less expensive outside peak seasons. You might even be using this strategy to book your travel to save money while you work. You can do the same in retirement to be able to stretch your funds to cover more activities and places to visit.
- Get insurance for travel. It might not have made sense to get travel insurance when you were younger because you don’t expect to get sick while away on a trip and if you do, you can shake it off and get back home without any hassle. But when you get older, you might want to factor in travel insurance to cover any possible sickness while on a trip. You might not easily recover from them because of your age. When you travel in retirement, insurance can help you when you encounter hassles like lost baggage, trip cancellation and even any kind of accident while travelling.
- Make the most of rewards on your card. When you travel, you can make the most use of your credit cards to get rewards and perks. As you travel, you can accumulate points which you can use at the end of the year to lower down your travel expense. There are also cards that lets you get big discount with airfare and even hotel accommodations which can also help you lower down your overall travel cost. Just make sure that you pay your credit card in full every month so you do not incur avoidable fees and card charges.
Planning for places to visit
When you are already preparing for those travel years in retirement, it might be tempting to just book a ticket and see where it leads you. As adventurous as that maybe, it might not be too feasible in retirement. Her are a few things you might want to look into before travelling at an old age.
- Check the cost of living in the area. This is critical especially if you plan to stay for a longer time and immerse in the culture. If you are travelling with your spouse or group of friends, you need to know how your finances will be when you stay in one place for a long time. The same goes when you are travelling alone because you might be surprised how finances change when you are living alone.
- Research safety and basic needs. Before you even go and book that travel, you need to have an idea where the nearest hospital, police station and other safety and even basic needs are. This can give you a peace of mind wherever you go because you know what to do and where to go in case of emergency.
- Let people know where you are going. This is something that you should never forget whenever you travel. Tell your family or your children where you are going and how long you will be away. Give them details of your itinerary or at least the hotel where you are staying.
It is exciting to think about the places you will visit and the different cultures you can immerse on when you travel in retirement. But you need to financially prepare for it because it does cost more money than looking for an activity at home. You also need to let your loved ones know about your trip to make sure that you get to talk to them in case of any emergency.