Retirement's Happy Space-Time Collision

  • 092523
  • 4 minutes

As the sage refrain from Steve Miller's Fly Like an Eagle goes, time keeps on slipping into the future. (Easy physics geeks, he was being lyrical.) Nevertheless, when we combine Miller's incontrovertible truth with the familiar adage, 'time is money,' it goes deeper. But money doesn't automatically follow time—it requires effort on our part. This awareness is beneficial for when we're no longer working and desire to spend time traveling (again, not 'time traveling,' nerds, stop it).

The trick is to have a reasonable surplus of money at the point in our lives when time and space collide. We need all three—time, space and money—to travel. And most of us are looking forward to that happy collision. According to a 2017 survey by the Transamerica Center for Retirement Studies, the most popular goal for retirement is travel. Also in 2017, an international economist at Visa wrote that he expected international travel among those 65 and older to more than double by 2025.

But determining how much and how often to splurge on travel as a retiree can be tricky. Getting a clear picture of what we can reasonably afford to spend might feel daunting. Consider this the starting point: four steps to map out the financial portion of your retirement travel goals.

1. Make your dollars count. As a retiree, we've got a serious advantage as a traveler: the flexibility of our schedule allows us to travel during the offseason—which means offseason pricing. But if you'd rather not visit the beach during hurricane season, even shooting for the "shoulder season"—the time between peak and offseason—can reduce costs. Similarly, airfare and hotels are often cheaper when arriving and departing in the middle of the week. We might also consider combining trips to save ourselves some transportation expenses. If skiing the Swiss Alps is on the bucket list and you're planning that dream trip to Venice, could you swing both while in that neck of the woods? You could save funds on airfare (and your back from another 12-hour flight over the Atlantic).

If you're setting your sights stateside, there are plenty of other perks to leverage. Admission fees to places like museums, theatres, and even our national parks are often heavily discounted for those over 65. Many travel agencies, hotels, and car rental agencies also offer reduced prices for seniors. A little research on this front can reap significant benefits.

2. Budget. Next up is no surprise: working out a budget is an integral step in financial planning. When figuring expected travel costs, break down all the expenses. Consider everything that will need factoring in, not just the obvious: of course, there's airfare and gas and accommodations, but if most or all meals will be at restaurants, that can add up quickly. Will we be shopping, grabbing a few souvenirs for the folks back home? Might some of the activities we'll enjoy require an admission fee? What about transportation while we're there—will we be renting a car, calling taxis, or using public transit? Thinking about all the areas we'll need to shell out for beforehand can help avoid unpleasant surprises when that credit card bill arrives.

Once we're clear on the hard costs of our trip, we can start developing our game plan. How much of our income do we need for everyday expenses? How much can we save each month? Of what we can save, how much do we want to set aside for travel? With these variables figured, we'll have a clear picture of when and how often we can plan on traveling.

If that picture isn't what we hoped for, we can consider adjusting our financial plan. Downsizing may be an option for us. Even if we're no longer under a mortgage, costs for things like electricity and natural gas might be much lower for a smaller space. Next, we can look at our recurring expenses: can we decrease or remove some of our costs for services and subscriptions? How about our regular spending on non-necessities, things like entertainment or certain conveniences? Tightening the belt in some less essential areas might afford us the means to travel farther, stay longer and enjoy these excursions more often.

3. Plan for the unexpected. In addition to budgeting for all the foreseeable costs of travel, there are prudent measures we can take to protect ourselves against certain worst-case scenarios. For example, will our medical insurance cover any unexpected care we might need if traveling abroad? Traditional Medicare coverage will typically only cover care received within the US. However, some Medicare Advantage plans may offer overseas options.

Travel insurance can be a great way to insulate against something like uncovered medical expenses. Depending on your plan, travel insurance may also offer reimbursement for lastminute trip cancellation, delay, or interruption for things like illness or injury, a natural disaster, or civil unrest. Travel insurance plans and coverages can vary widely, so we'll want to find one that best suits our use case and make sure we understand the plan's limitations before locking it in.

4. Allocate resources. If travel is one of our big retirement goals, we can bake that into our planning from the outset. If you're working with a financial advisor, (s)he should be keenly tuned in to your vision for retirement to help you plan out your goals.

Logically, the financial legwork continues even once we hit retirement. We can consider how our assets are organized depending on where they live. For example, if our travel savings are liquid, are they delineated from the rest of our cash savings? We should know the amount we can set aside specifically for travel and keep those savings earmarked for their intended purpose.

We'd want to take a similar approach if our travel savings are part of our portfolio and consider how soon we intend to use those funds. Whatever portion of those assets we plan to use in the next three to five years may be best moved from higher-risk investments to more stable vehicles. This analysis can protect that part of our savings against a potential market downturn.

A little planning and practical wisdom can help us fly or even soar like an eagle, Arctic tern, ruby-throated hummingbird, or whatever Avis we aspire to be—to wherever our adventurous spirit may carry us. Till then, let's work at bringing our money with us as time ushers us from the present on into infinity.

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