Can You Afford To Travel Every Year In Retirement? Experts Weigh In
Written by
Lydia Kibet
Edited by
Amen Oyiboke
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
For many people, travel is one of their retirement goals. However, it’s one of the largest expenses in retirement. And if you’re not careful, it can drain your savings faster.
So, can you afford to travel every year once you retire? According to finance experts, yes, you can, but only if you plan early. Here’s what they recommend doing to make this happen.
Build a Travel Fund Before You Retire
Don’t wait until you’re already retired to figure out how you’ll pay for travel. Start early and treat travel like any other essential retirement expense.
“Your retirement plan should include travel expenses as an essential financial commitment. Think ahead and allocate funds for your dreams,” said Trevor Houston, CEO at ClearPath Wealth Strategies. “Creating a separate travel fund with small monthly deposits allows you to establish a budget that can help eliminate travel expenses.”
By setting aside money for travel during your working years, you can avoid dipping into your retirement savings.
Know What Kind of Travel You Want and Plan Accordingly
Knowing what kind of travel you want in retirement can help you budget for it. There’s a huge difference between quarterly weekend getaways and two international luxury trips per year.
“People should be clear about where they’d like to travel to and what heights of luxury they want to experience,” said Lukendric Washington, owner of Manifest Wealth Management. “Some people simply want a Caribbean cruise each year, but there are others who want to travel to Switzerland and Japan, and they want to do it in style.”
Washington also suggests thinking about how many active travel years you might realistically have in retirement.
Estimate How Much You’ll Need To Save
Once you know the kind of travel you want and how often, it’ll be easy to estimate the amount you need to save before retirement.
According to Jay Zigmont, founder of Childfree Wealth, “If you want to spend $10k per year traveling, you will need an extra $250k saved before you retire. This estimate is based on the 4% safe withdrawal rate. To calculate how much extra you need to save, take your annual travel goal and multiply it by 25.”
This number will vary depending on your travel goals, but it can help you figure out a realistic budget.
Consider Slow Travel To Maximize Your Budget
If you’re open to changing the way you travel, you can stretch your budget without sacrificing the experience.
“Spending more time in fewer locations can sometimes cost less than rushing and hopping between different destinations,” said Houston. “The cost of living as a local in a vacation home for a month can be far cheaper than moving between resorts and flights.”
Think Beyond Yourself
You also want to consider who else might be on your travel plans. Will you bring your spouse, children, or grandchildren along? These added costs can affect your budget, and you should plan for them in advance.
“You should be intentional about the details. Before you do it, ask yourself. Where are you going? Who are you going with? What do you want to do when you’re there? And how well do you want to do it?” said Washington.
More From GOBankingRates
