Travel has many benefits that can improve your health and overall well-being in your golden years. Here are our tips for planning for travel and adventure in retirement.
The transition into retirement can be both exhilarating and overwhelming. With decades of hard work and perseverance behind you, a life of freedom can be an incredibly rewarding payoff. Yet retirement can also bring about feelings of listlessness and isolation, especially if your career was a big part of your identity and social life.
To make the most of your next phase of life, it’s important to have a plan for how you’ll fill the potential void of no longer working. Many retirees choose to fill this void through travel and adventure.
However, exploring new places, experiencing different cultures, and creating lasting memories aren’t just ways to fill the time. These pursuits offer a multitude of benefits that can make your golden years even more fulfilling than you thought possible.
In this blog post, we’ll explore the benefits of travel in retirement and share financial tips and strategies to help you prepare for your new life of adventure.
The Benefits of Travel in Retirement
Traveling in retirement provides an opportunity to explore the world at your own pace, without the constraints of a 9 to 5 job. Not only do you have the freedom to set your own schedule, but the ability to travel during off-peak times can also result in significant cost savings.
However, the benefits of travel in retirement extend far beyond flexibility and price shopping.
Indeed, numerous studies suggest that travel and adventure can contribute to your overall well-being, from improving your physical health to sharpening your cognitive abilities. Taking vacations can even help you live longer, according to the Helsinki Businessman Study, one of the longest follow-up studies in the world.
Moreover, travel can provide a sense of purpose and engagement, which is crucial in retirement. It allows you to learn new things, meet new people, and have new experiences, all of which can lead to increased happiness and satisfaction in life.
Planning for Travel in Retirement
To reap the many benefits of travel and adventure in retirement, careful planning is key. The following tips and strategies can help you prepare financially for your travel goals.
#1: Budget for Travel
Creating a retirement budget is crucial for determining how much income you’ll need to cover your expenses. Once you understand your income needs, you can adjust your savings and investment approach accordingly.
Start by listing your current expenses, including everything from housing and food to healthcare and entertainment. In addition, be sure to account for occasional expenses like gifts, home and car repairs, and periodic upgrades.
Next, adjust your expenses for retirement. For example, if you plan to pay off your mortgage before you retire, your housing costs may decline significantly. Meanwhile, your healthcare expenses may rise depending on your insurance coverage and overall health.
Finally, consider how travel factors into your budget. Think about how often you’d like to travel, as well as your ideal destinations.
As you develop your retirement travel budget, feel free to dream big. The goal isn’t to limit yourself but to gain clarity on how much money you’ll need to support your desired lifestyle. You can always make changes down the road if necessary.
#2: Review Your Savings Targets
Now that you have a better idea of what your expenses will be in retirement, you can determine if your savings are on track or if you need to start saving more aggressively.
First, review your current savings rate. How much do you contribute each month to qualified retirement plans like a 401(k) or individual retirement accounts (IRAs)?
If you aren’t contributing up to the respective limits and can afford to save more, try to max out your account contributions. In 2023, you can contribute up to $22,500 to a 401(k) plan ($30,000 if you’re aged 50 or above) and $6,500 to an individual retirement account ($7,500 for those 50 and above).
If you still have additional funds to spare, you can always stash excess cash in a separate savings account to use exclusively for travel in retirement.
#3: Make Sure Your Investments Align with Your Retirement Goals
In addition to saving diligently, one of the most effective ways to achieve your retirement goals is to develop an investment plan that’s aligned with your objectives and risk tolerance. Essentially, this means having the right mix of stocks, bonds, and other assets in your portfolio to preserve and grow your wealth over time.
When it comes to planning for travel in retirement, consider designating a separate investment account for travel-related expenses. Since you may be making more frequent withdrawals from this account, a Roth IRA or taxable investment account may be more tax-efficient than a traditional IRA. (Distributions from traditional IRAs are treated as ordinary income.)
In addition, you may want to take a different investment approach to achieve your travel goals than your approach to fund your general retirement needs. A fiduciary financial advisor like Benchmark Wealth Management can help you craft an investment plan that considers your objectives and tax situation.
#4: Delay Claiming Social Security Benefits If Possible
The age at which you claim Social Security benefits affects the amount of income you receive throughout retirement. If you can afford to wait until your Full Retirement Age (FRA) or later to claim your benefits, the additional income may help supplement your travel costs in retirement.
When deciding when to claim your Social Security benefits, be sure to consider factors such as your other sources of retirement income and projected living expenses. You can also use the Social Security Administration’s Retirement Estimator to help you determine the best time to start taking benefits.
#5: Consider Your Insurance Needs
While travel and adventure in retirement have many benefits, there may be risks involved as well. For example, if you fall ill or suffer an injury before or during a trip, you may incur substantial cancellation or medical treatment costs.
Travel insurance can help protect you financially if your plans change unexpectedly due to illness, injury, or other unforeseen circumstances. In addition, many travel insurance policies offer 24/7 travel assistance services, which can assist with medical emergencies, lost passports, or legal troubles. This can be incredibly helpful if you’re traveling in unfamiliar locations or countries where you don’t speak the language.
Lastly, if you have an existing health condition, make sure you have a plan for how you’ll manage it while traveling. Since Medicare coverage outside the United States is limited, you may need to purchase supplementary health insurance if you plan to travel abroad.
Benchmark Wealth Management Can Help You Plan for Travel and Adventure in Retirement
By understanding the costs associated with travel and saving and investing accordingly, you can make your retirement dreams a reality. But remember, planning for travel in retirement isn’t just about managing your finances wisely. It’s also about making the most of your retirement years and living life on your terms.
Whether you’re dreaming about a grand adventure around the world or simply want to visit your grandchildren more often, Benchmark Wealth Management can help you make travel a part of your retirement plan. Contact us today to learn more about how we can help you reach your retirement goals.
Richard W. Stout III is managing director of Benchmark Wealth Management, LLC, with 25 years of experience in the financial industry. He specializes in financial planning and asset management for individuals, families, and institutions seeking to build and monitor durable and sustainable plans for their financial futures. Rick is a Certified Financial Planner™ professional and holds the Accredited Investment Fiduciary® (AIF®) designation. He obtained his MBA from Rensselaer Polytechnic Institute and his BA in Economics and Anthropology from the University of Connecticut. Rick has earned a Master of Science degree in Personal Financial Planning from the College for Financial Planning. He has extensive background experience in lending, credit review and analysis, and real estate and partnership management. Learn more about Rick by connecting with him on LinkedIn.
Thomas J. Britt is managing director of Benchmark Wealth Management, LLC, with 23 years of experience in the financial industry. He specializes in executive financial planning, retirement planning, investing, as well as the management of trusts and endowments. Thomas is a CERTIFIED FINANCIAL PLANNER™ professional. He holds the Master Planner Advanced StudiesSM, MPAS®, Certified Investment Management Analyst® (CIMA®), and Chartered Retirement Planning Counselor℠, CRPC® designations. Thomas earned a Bachelor of Science in Finance from the University of New Haven, an MBA in financial technology from Rensselaer Polytechnic Institute, and a Master of Science in Personal Financial Planning from the College for Financial Planning. He is also a proud veteran of the United States Navy Submarine Force. Learn more about Tom by connecting with him on LinkedIn.
Additional information, including management fees and expenses, is provided on our Form ADV Part 2, available upon request or at the SEC’s Investment Advisor Public Disclosure site, www.adviserinfo.sec.gov/firm/160192
Securities offered by Registered Representatives through Private Client Services, Member FINRA, SIPC in the following states: AZ, CA, CT, FL, KY, MA, ME, MI, MN, NH, NJ, NY, RI, TX. (Securities-related services may not be provided to individuals residing in any state not previously listed.) Advisory services offered through Benchmark Wealth Management, LLC a Registered Investment Advisor. Benchmark Wealth Management and Private Client Services are unaffiliated entities.