For many retirees, travelling makes up a big part of their retirement plans. And after working full-time for decades, a chance to see the rest of the world is something they deserve. Does this sound like your retirement plans, too? If so, it’s best to start planning as early as possible, ideally a few years before you retire.
Here are some tips on planning for travel after you retire–particularly how to do so while living on a pension and your savings.
Figure out your pension
First things first, how much will your pension be after you retire? You can ask your employer’s defined contribution specialist or look at your pension statement to find out the amount. In doing so, you have an idea of what kind of lifestyle you can live after you retire. Moreover, you can start planning the places you will go and what your travel style will be. After all, how and where you travel is going to be dictated by your budget.
Stretch your savings
By now, you probably have a sizable amount in your savings account, and you’re likely thinking of spending it on your travel dreams. We get it–the urge to spend your hard-earned money on your travel plans is strong, but think about it this way: the longer you stretch your savings, the more places you can visit, and the more things you can do while travelling.
So instead of blowing off a big chunk of your retirement savings on an all-out trip to Paris, why not stretch out your money and make a modest trip to multiple European cities? Instead of buying a flashy new car, why not use the money to backpack through Southeast Asia? You will open the door to more possibilities if you are willing to make a few sacrifices.
Consider downsizing
The house will be empty, and the cars won’t be driven around as much while you travel. In this case, consider downsizing to a smaller home and selling off one of your cars to put more money in your travel funds. If your pension can support all of your basic needs and travel expenses, then the money you get from downsizing can be used for travel splurges like flight or hotel upgrades. Alternatively, you can use it to invest and bring in more income.
Create a budget
You have an idea of how much your pension will be, and you have a clear view of your savings. Given these amounts, start planning a budget for when you retire, one that will support both your basic needs and your travel expenses. Here is a sample breakdown of a retirement budget with travel expenses considered:
- Basics
- Groceries
- Utilities
- Healthcare
- Insurance
- Clothes
- Other expenses
- Gas
- Car maintenance
- Home maintenance
- Entertainment
- Travel expenses
- Transportation
- Luggage fees
- Food and toiletries
- Activities and entertainment
- Visa fees, toll fees
- Travel insurance
- Accommodations
Depending on the cash flow you will have after retirement, you will likely have to make adjustments to the lifestyle you live now. Hence, staying flexible is imperative to travelling the world after you retire. Otherwise, you may have trouble staying on budget while you travel.
Look for discounts
If you plan to be a regular traveller after retirement, you have to learn how to be a good discount hunter. Your nose should be able to sniff out airfare deals, hotel discounts, cheap tour passes, and other things that you can get cheaper. In this way, you can stretch your budget and save money for even more travel destinations. And after all, who wants to pay full price for something when you can get it cheaper?
Find travel companions
Do you have retiree friends who are also keen to travel? Travelling with a group is a great way to save money–and it’s also more fun! You can split the costs for hotels, food, rental cars, transportation, and other travel costs, bringing down the cost-per-person of the trip by a significant amount.
Plan long trips
To make the most of your money, consider planning longer stays for each vacation. For example, spend four to six weeks travelling instead of just a week. As long as you create a reasonable budget, the difference between a short and long vacation won’t be as huge as you think.
If you want to regularly travel after retirement with a pension as your main income, start planning as early as now (yes, even if it’s ten years before you retire) and use these tips to ensure that you stay on budget. You can also consider consulting with a financial advisor to ensure that you haven’t missed anything with your future financial plans.
Are you planning to travel after you retire? Which destinations do you want to see? Tell us all about it in the comments below.