Published 15 February 2024
The holidays have been over for a month. The family left long ago, and now it’s just… cold. What about planning that next trip? As a retiree, how much can you responsibly spend?
Budgeting for travel in retirement can be trickier than during your working years, when expenses are balanced by regular paychecks. Generally, the travel budget for retirees ranges between $10,000 and $50,000 annually. Being single versus traveling with family significantly impacts this figure. Additionally, your choice of accommodations and transportation, such as hostels versus luxury hotels or budget airlines versus premium carriers, also greatly affects overall travel costs.
This article focuses on how to budget for travel in retirement effectively and how to maximize your spending.
1. Invest Appropriately
In an unstable market environment, it’s vital to ensure your money is working as hard as possible. For upcoming trips within the next 24 months, consider holding these funds in safe cash alternatives. This might include options like T-bills, CDs, or money market funds. While all investments involve some level of risk, having a strategy that aligns with your risk tolerance is essential. For expenses further out, you may consider a more aggressive investment strategy.
2. Separate Your Goals
When planning for retirement travel, it’s important to have a clear idea of how much you want to spend. However, not all expenses will persist throughout your retirement. For many, travel spending tends to decline as they age. Thus, recognizing which expenses will decrease or stop altogether can significantly influence your financial planning.
3. Account for Declining Expenses
When planning travel for couples, consider creating individual travel goals, akin to separate ‘retirement passports’. Aim to prioritize overlapping destinations. Moreover, understanding the “go-go, slow-go, no-go” phases of retirement can help dictate the types of trips you take and when. Start with ambitious adventures in your early retirement and gradually adjust your travel aspirations as time goes on.
4. Take Advantage of Flexibility
Flexibility offers retirees a significant edge when it comes to travel budgeting. You can often find incredible travel deals, especially if you’re open to spontaneous bookings. Subscribing to services that alert you to discounts on flights and vacations is beneficial. For instance, Google Flights provides useful alerts for specific destinations you intend to visit. This approach can help identify the most budget-friendly travel opportunities.
Most retirees envision travel as a key component of their retirement lifestyle. However, accurately assessing travel expenditures can be challenging. To build a solid financial plan that allows for enjoyable travel experiences, it’s wise to anticipate a higher expenditure than you might initially consider.
By adopting these strategies, you can better prepare for your retirement travel goals and experience enriching adventures without financial stress.
Disclaimer
This article reflects the views of iBestTravel’s contributing adviser. You can check adviser records with the SEC or with FINRA.
