Want to Travel When You Retire? 7 Tips on How to Pay for It
Life + Leisure

Want to Travel When You Retire? 7 Tips on How to Pay for It

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The dream of traveling in retirement -- whether that means relaxing on a beach or hiking across Europe -- is common enough for folks thinking about their golden years. After all, they’ve got to make up for all the vacation time they’re not taking during their working days.

Nearly two-thirds of pre-retirees recently polled by the TransAmerica Center for Retirement Studies said that they wanted to travel more in retirement, making that a more popular goal than spending time with friends or taking up new hobbies. “One of the top things our clients are looking for in retirement is the freedom to travel and investigate the world and have different experiences,” says Brad Stark, co-founder of Mission Wealth in Santa Barbara, Calif.

Travelers age 50 and older planned to take four to five trips this year, spending a total $120 billion, according to AARP. More than half said they’d save money specifically for travel, but 51 percent also said that costs were the biggest barrier to travel.

The TransAmerica poll found that only 34 percent of American workers are confident that they’ll be able to retire with a financially comfortable lifestyle, a finding echoing dozens of other recent retirement surveys and reports.

That doesn’t mean those visions of retirement travel are just pipe dreams, but it does mean that you’ll need a plan to make it work.  These seven tips will help you reach your objective:

1. Start planning before you retire. Rather than just saying “I want to travel in retirement,” think about what that would actually involve. “You need to know how grand the aspirations are, because ultimately, that will impact how expensive the travel will be,” says Joe Jennings, wealth director at PNC Wealth Management.

Related: How to Fund the Retirement Travel Bug

Getting as specific as possible about your travel plans will not only make you more likely to properly prepare, but they’ll also motivate you to actually travel rather than just talk about it. Americans who have a savings plan with specific goals are nearly three times as likely to save successfully than those without specific goals.

2. Plan for the “no-go years.” Retirees often think that they’ll be able to travel throughout their retirement, but planners say that most people tend to slow down once they hit advanced years. Consumers over aged 70 told AARP that health concerns are the biggest thing preventing them from taking the trips that they want.

Don Roy of New England Wealth Advisors says he asks clients to think of travel in retirement in three phases, “the go-go years, the slow-go years, and the no-go years.” Travel funds in the third phase often get redistributed to cover health care expenses or other costs that tend to hit in old age

3. Calculate costs -- and factor in inflation. Once you’ve decided what kind of travel you’d like to do in retirement, do some research to get a sense of how much such trips would cost. A weeklong trip to Europe for a couple can run $5,000 for flight and airfare alone, while a big, multi-generational trip could run three times that. The cumulative cost of annual vacations over the course of a long retirement can easily reach six figures.

Give yourself a cushion of at least 20 percent and allow for inflation. If you end up with too much money, you can always upgrade your trip. “People have a tendency to underestimate the costs of travel, and that’s where problems arise,” says Kathleen Hastings, a certified financial planner and portfolio manager with FBB Capital Partners.

4. Downsize early. Funding your travel budget, of course, has to happen after you’ve met all the non-discretionary obligations in your budget like housing and health care costs, which tend to grow disproportionately to income in retirement. If you don’t have enough cash to make that happen, you’ll need to decide whether travel is worth making big lifestyle changes, such as taking on part-time work or downsizing your home.

Moving to a smaller home or one in a less expensive area could save you hundreds each month. (You can get a sense of how much with this calculator from the Center for Retirement Research at Boston College.) The sooner you make that move, the longer you’ll be able to stash that extra money in your travel fund.

Related: Retirement Nomads: How One Couple Makes It Work

5. Travel while everyone else is working. One of the great things about retirement is that you’re not beholden to anyone else’s schedule. That means that you can take late morning flights or book a room in the off-season to realize substantial savings.

It’s usually cheaper to fly between Monday through Wednesday, rather than Thursday through Saturday. Flying from or to a smaller airport or on a connecting flight also usually costs less. You might also save money buying two one-way tickets as opposed to a round trip. The more flexible you are, the sweeter deal you’ll find.

Be sure to ask about discounts when booking. Whether you’re booking a hotel room, renting a car or even buying a plane ticket, many travel vendors offer discounts for AAA or AARP, veterans or other groups. If you qualify, be sure to ask if a discount exists.

6. Consider insurance. If you’re taking a large trip, spring for travel insurance. Health issues that could derail a planned trip become more common among older travelers, and travel insurance lets you recover some of the cost of a trip missed for a medical reason.

If you’re going to be overseas for a long period of time, you may also want to get a travel health insurance plan that covers costs in the country to which you’re traveling. Some Medicare supplemental insurance plans provide this kind of coverage, but most do not.

7. Manage your rewards cards. Especially as a retiree, you shouldn’t be taking on debt to pay for discretionary items like a vacation. However, if you have the funds to cover the cost of the trip, using a rewards credit card to pay for the vacation (and paying it off in full when the bill comes) is an easy way to earn cash back or travel rewards you can apply to your next vacation. “Managing your miles and hotel loyalty programs can also save you some money,” says Larry Rosenthal, president of Rosenthal Wealth Management Group.