7 Tips for Budgeting for Travel During Retirement

Retirement is a time when many people look forward to fulfilling their travel dreams and exploring new destinations. However, it is essential to plan and budget wisely to ensure that your retirement funds can sustain your desire to travel for years to come. In this blog post, we will discuss some valuable tips for budgeting for travel during retirement, allowing you to enjoy your adventures while aiming to maintain financial stability.

Tip #1: Set an Overall Budget for Your Trip—but Leave a Buffer for Splurges and Unexpected Expenses

Develop a comprehensive travel budget that encompasses all your travel-related expenses, including transportation, accommodations, meals, activities, and travel insurance. Research the average costs for your desired destinations and factor in Good any additional expenses such as visa fees, vaccinations, and any potential medical care you may need. Having a detailed budget will allow you to estimate the total cost of your trip and plan your savings accordingly. We recommend leaving extra room in your budget for an occasional splurge, emergencies, and other unexpected expenses that may pop up.

Tip #2: Choose Destinations Within Your Budget

If you have a long list of travel destinations you would like to visit, we recommend prioritizing them based on personal preference, cost, and feasibility. It is important to consider factors like exchange rates, peak seasons, and weather conditions for each place. By narrowing down your top choices, you can spend less time being overwhelmed by options and more time researching which destination will fit best within your budget.

Tip #3: Research Flights & Dates to Find the Optimum Time to Book

Transportation expenses can take up a significant portion of your travel budget. One of the most crucial steps in ensuring a budget-friendly trip is conducting thorough research on flights and dates. Researching flights allows you to identify the best deals and discounts, helping you secure the most affordable options available. By comparing prices across different airlines and travel websites, travelers can make informed decisions that align with their budgetary needs. Also, being flexible with travel dates can lead to major savings as well. Be sure to explore different dates for departure and return travel and consider off-peak seasons for your destination of choice. Explore flying out of or booking the international leg of your trip from different airports—either those close to you or one you could book a connecting flight to. It may end up being cheaper in the long run.

Tip #4: Look for Deals & Packages

It is no secret that everyone loves a great deal—especially when it comes to budgeting for travel. Whether you work with a travel agent or search on reputable websites, there are plenty of ways to find deals and packages for vacations in the most popular destinations. Several membership warehouses, such as Costco, and organizations like AAA also offer special deals and packages for their members. The wonderful thing about vacation packages is that you typically have the option to bundle airfare and accommodations, which, in turn, can help you save money!

Also, it may be worth pricing out renting a home vs. a hotel room. Depending on your overall plans for the trip, this might allow you to stay longer at a greater discount, eat some meals in, and enjoy the creature comforts of home.

Tip #5: Factor Travel into Your Retirement Spending Plan

Whether you are managing your portfolio and retirement plan yourself or working with a financial professional, factoring in travel (if this is a retirement goal for you) when mapping out your income and spending plan in retirement is vital. Some advisors recommend using a bucket strategy to outline where you will put your income/savings as you start to take distributions from your retirement funds, with a fixed expense, variable expense, and future expense bucket. Depending on where you are at in your retirement journey, travel may fall into the variable or future expense bucket.

It is important to know where those funds will come from, whether it be a checking or savings account or returns from your portfolio. What is the interest rate on your checking or savings account? Will you have to sell assets to pay for travel? What will be the tax impact if you must do so? According to Investopedia, “If you’re using your portfolio to cover your travel expenses, then it’s important to remove that portion from your [higher risk] assets if you plan on traveling in the next three to five years… Moving travel savings from stocks into bonds or into another relatively safe investment can help insulate those assets from market downturns.” . Also, consider how inflation and exchange rates may impact your travel plans. The power of your dollars is a key factor to consider.

Starting a vacation savings account is also a wise and effective strategy to budget for travel during retirement. By setting aside money specifically for vacations, retirees can ensure they have the means to fulfill their travel aspirations without compromising their overall financial stability. Establishing a dedicated savings fund gives you the ability to cover travel expenses like accommodations, flights, dining, visiting attractions, and more. In addition, those with a fund specifically for travel can feel peace of mind during their trips, knowing that their vacation expenses are not coming out of their day-to-day budget.

Tip #6: Leverage Travel Credit Cards and Rewards and Avoid Unnecessary Fees

Some credit cards can charge foreign transaction fees for every purchase made outside the U.S. This can quickly add up! If using credit cards is an option for you, seek out one that does not charge a transaction fee. Keep in mind that the card may still have an annual fee and variable percentage interest rates that can add to your travel expenses.

We often talk about returns on your investments, so wouldn’t it be great if money you spend on your basic expenses or travel on a credit card could generate a return, too? Well, some can! Depending on the credit card, you may be able to rack up rewards on every dollar you spend that you can turn into travel rewards—or even cash.

Lastly, avoid racking up ATM fees by ensuring you have sufficient cash on hand and using your designated credit card(s). And do not forget to let your bank and credit card companies know you will be traveling, so your cards do not get declined!

Tip #7: Build a Budget-Friendly Itinerary

Careful planning, such as building an itinerary, is an excellent way to manage your travel expenses during retirement. When creating your itinerary, consider booking accommodations in advance, seeking out affordable transportation options/using public transportation, and opting for restaurants that the locals frequent. We highly recommend having a back-up plan for ground transportation, as strikes and other shutdowns are common in certain countries.

You may also want to think about visiting your selected destination during the off-season to find deals and discounts on airfare, lodging, and local attractions. Of course, you will want to work with the people traveling with you to prioritize visiting attractions and doing activities that align with personal interests so that you can make the most out of your travel experience. Are there two similar attractions that you are interested in? Do some research to see which offers the better experience for the lower price. Also, remember to research when these attractions are closed, as some locations shut down for certain parts of the year or have holiday closures you may not have accounted for.

Are You Ready to Plan Your Next Vacation in Retirement?

Chances are, if you have landed on this blog post, then you are looking for ways to save money to travel as a retiree. By following the tips outlined above, you can help set yourself up with a vacation fund and a plan that allows you to satisfy your wanderlust without impacting your finances negatively. Let’s face it—you have worked hard all those years, and you deserve to enjoy retirement the way you want it to be. Start saving today so that you can kick back and relax on a sandy beach or Italian vineyard later down the line.

Need help with planning for your retirement? Contact us here to learn how our team can help.

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Investment advisory services are offered through Liberty Wealth Management, LLC (“LWM”), DBA Liberty Group, an SEC-registered investment adviser.  For additional information on LWM or its investment professionals, please visit www.adviserinfo.sec.gov  or contact us directly at 411 30th Street, 2nd Floor, Oakland, CA  94609, T: 510-658-1880, F: 510-658-1886,  www.libertygroupllc.com. Registration with the U.S. Securities and Exchange Commission or any state securities authority does not imply a certain level of skill or training.

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References

Bishop, Jordan. (November 3, 2022) 7 Tips for Saving Money on Travel During Retirement. Due. https://due.com/7-tips-for-saving-money-on-travel-during-retirement/

Lake, Rebecca. (April 29, 2022). How to Plan for Travel in Retirement. Investopedia. https://www.investopedia.com/retirement/how-plan-travel-retirement/

Shuman, Taylor. (October 17, 2022). 7 Easy Ways to Save on Travel in Retirement. Seniorliving.org. https://www.seniorliving.org/travel/retirement/

Stewart, Jackie. (January 31, 2022) 13 Money-Saving Travel Tips for Retirees. Kiplinger. https://www.kiplinger.com/personal-finance/spending/leisure/travel/604132/a-penny-pinchers-guide-to-travel