Ads for retirees often show images of happy seniors enjoying trips to exotic locations, but that’s only the reality for a small number of people. For most retirees, that’s just wishful thinking.
Many people will not have money to afford retirement travel.
There have been quite a few surveys on this subject and they reveal the same thing: people want to travel when they retire, but they’re not doing much to make that happen.
HSBC Bank’s Future of Retirement study surveyed 1,000 Americans and found that 40 percent of them wish to travel extensively when they retire, but 30 percent admit to falling short of their retirement goals.
Another survey, by the Transamerica Center for Retirement Studies, asked 1,500 Americans and found that travel is one of the top two goals for retirement — second only to spending time with family and friends. Yet less than half of the respondents are confident that they’ll be able to afford to travel when they retire.
Not surprisingly, the top change retirees would have made if they could do it all over again is to save more money for travel. Just below that is to budget expenses more carefully.
If you want to travel in retirement, you need to set goals early and get to work.
After all, budget travel options tend to shrink as you grow older. You probably won’t want to crouch in a cramped bus for days or sleep in a hostel dorm room with a bunch of drunk backpackers when you’re 70.
For a regular trip with flights and hotel accommodation, a general rule of thumb is $5,000 for a couple. This should cover airfares, hotel stays and other expenses over a seven- to ten-day international trip
Of course, it’s still possible to do budget travel when you retire, too, if that’s what you want.
As long as you’re healthy, you can still do work exchange. And if you own a home, home exchange could be a great alternative to hotels — and it’s even cheaper than hostels! (Here, I interviewed a retiree who uses home exchange to afford travel. She has swapped homes more than 50 times over the years.)
And even if your travel style is more conventional, there are ways out there for you to minimize your travel expenses, for example by using discount travel booking websites or by collecting frequent flyer miles. As retirees, you might even have an edge because some companies offer senior discounts.
Regardless of how you want to travel in retirement, planning is essential if you want to make it happen.
Firstly, think about how you want to travel.
Do you want to do a one-week vacation every year? Do you want to escape to Mexico every winter? Do you want to move to Costa Rica, where living costs are lower, and explore Central America?
Jim Yih, A Canadian retirement expert, runs retirement workshops and says that most people, when asked what they want when they retire, answer, “I wanna travel more.”
But the truth is that, most retirees travel just as much in retirement as they did when they were working. In Yih’s words, travel is “the thing that we do when we’re not doing what we do the rest of the time”.
Next, figure out how much it will cost you.
For example, if you live in Canada to be close to the grandchildren and only take one week-long trip a year, then a few thousand dollars should be enough, depending on where you travel. Think of your retirement travel funds as separate from the rest of your retirement savings, which should go into your day-to-day living expenses.
If you plan to actually move to another country, though, you’ll need to figure out how much your living expenses will be. You may find that you won’t need much to retire in some countries.
Then come up with a strategy.
The default way to prepare for retirement is by regularly contributing into a retirement savings account. (Here, I interview Nora Dunn, who, despite her unconventional lifestyle, saves for retirement the normal way.) But it’s not the only way to do it.
You can be as creative as you want. How about starting a business and selling it right before retiring? Or can you hire a manager to handle the business so it continues to produce income when you retire? Maybe you can continue doing some consulting work in retirement?
For me, the plan is to build multiple streams of passive income. This seems like the ideal solution to me because as soon as I build enough passive income (I have a magic number in my head), I can retire and not have to work again. Ever.
And once you’ve done all that planning, all you have to do is to make it happen. Be one of the few retirees who will actually be able to afford retirement travel.
Images: 1. Nikola Begenisic (CC BY 2.0 License); 2. Francisco Osorio (CC BY 2.0 License); 3. 401(K) 2012 (CC BY-SA 2.0 License); 4. Steven Depolo (CC BY 2.0 License).
Definitely we will have to get creative to travel when we retire which is only 7 years away. Luckily we did do a bit of traveling already which is part of the reason we have so much debt!! I wouldn’t recommend wracking up a lot of debt to travel. Do as I say, not as I did!
It’s always great to get advice from someone who’s been there. It’s always much, much easier to start working on your finances when you’re young. Thanks for stopping by, Debs! All the best with your debt repayment. :)
Not being able to travel later on really freaks us out. Or even worse – not making it until retirement! Life is way, way too short – that’s why we decided to go before it was too late!
That’s true, Tracey. We never know how much time we have.
Great points and advice you bring up here in relation to retirement stats, Deia! (And they are unfortunate).
We also recently wrote about why people should travel why they’re young. But you’ve included more specifics in relation to finances. We focused more on the health aspect, which yes you simply can’t predict!
I agree. Finances are not exactly easy to handle, but you can prepare for them — which makes it such a waste if you can’t travel just because of finances. Health, on the other hand, is a great reason to not delay travel for too long.
Think about joining the US Peace Corps. My wife and I are retired teachers. We retied in 2008 at age 58 and so far have spent three years teaching in a university in Chongqing, China and are currently living in rural Jamaica. You are provided travel, culture and language training as well as technical training for your job assignment. Your medical is covered as well as your living expenses and you get the satisfaction of making the world a more peaceful place and learning to live overseas. For young people, it is a good pathway to foreign service or international development work. Think about it. Sometimes the easiest way to get what you want is to give it away.
That’s a great solution for healthy retirees! You’re right, even in retirement, travel doesn’t have to mean two-week vacations at four-star hotels. With a little creativity and determination, there are always ways to make it work.
That’s why I’m glad I went abroad at my age instead of stuck in a pile of student loans and debt. I’d rather explore and travel now than be 70 and not be able to do 1/4 of the things due to health reasons. Then again it’s hard because I’m young I haven’t worked enough to make more money…sigh the dilemma of balancing life travel and work. Very interesting article though!
Yes, the finances I can plan for, but health is something else entirely. It’s definitely a tough balance!
This is one of the reasons we are leaving now to travel. Life is too short to wait until retirement to fulfill lifelong dreams.
Yeah, the financial side of retirement, you can plan and prepare for. Health is a lot more tricky to predict, though.
Very interesting article.
Another thing to consider would be that with fuel consumption being so high and reserves as low as they are, by the time I make it to retirement age. Air travel may be only for the very wealthy.
Unless they get working on them solar powered planes ;)
That’s definitely a concern. Airfares have been dropping over the past few decades, but they’re slowly going up again. Let’s hope they do get solar panels or alternative fuels to work on planes. :)
That’s why you should travel now!
Or plan on a retirement that includes travel. :)