It’s a daydream that’s crossed just about everyone’s mind at one point or another – quit work, sell the house, pack a suitcase and head out into a life of travel. But what if you turned that daydream into your retirement reality? What does it take to spend retirement not relaxing at home, but discovering a whole new world through travel? With 360,000 Americans receiving their social security benefits at foreign addresses in 2013 – a 48% increase over 2003 – it’s not such a far-fetched question.
Are You Really Ready?
There’s a lot of planning involved before embarking on a life of travel, and that planning starts with an honest assessment of your readiness for such a lifestyle. While there are no right-or-wrong answers, you need to ask yourself the following:
- Do you really love to travel, or just vacation? It may seem obvious, but there’s a big difference between a week-long vacation and a lifestyle based on travel. Do you like packing, flying, finding shelter and all the other inconveniences involved with traveling? Or is a week or so on vacation enough to satisfy you? Are you willing to “rough it” if that’s what it takes to afford extended travel?
- Do you have obligations that require you at home? If you are caring for elderly parents, disabled children, or grandchildren who need your presence, you will probably find it very difficult to hit the road indefinitely.
- How’s your health? While you don’t need to be in perfect condition for a life of travel, you do need to be in good enough health to cope with the stress of life on the road. If you have a serious or chronic health issue, check with your doctor before making long-term travel plans. Because Medicare does not cover health expenses incurred outside the US, you’ll need travel insurance to cover any medical emergency.
What’s Your Financial Situation?
World travel does not come cheap – one week-long international trip can cost $5,000 and up for two people. If you’re planning on staying abroad considerably longer than that, you’ll need to take steps to prepare financially. Extensive travel requires a healthy nest egg – but the exact amount depends a great deal on your expectations. If you want to stay in upscale hotels throughout Europe or North America, you’ll need a hefty bank account before heading out. If you are willing to stay in modest accommodations – hostels, inexpensive motels, rented apartments or campgrounds – you can travel quite inexpensively. Visiting countries in the developing world is another way to save big – in many places, you can travel on just a few dollars per day.
Whether you plan on several big trips a year, or a more permanent life on the road, your itinerary needs to start with an honest look at all of your retirement savings, including money in the bank, investments, social security, pensions and any income from rentals or businesses.
Since you may not have set up your retirement savings and investing plan to accommodate frequent or full-time travel, you'll need to seriously reexamine your retirement income plan. Once you know what you have to work with, you’ll be able to assess how much you can budget for daily expenses while traveling. A good financial consultant can help you analyze your investments to weed out any weak spots or potential for improvement.
If you are taking a major plunge – heading out for a year or more on the road – it’s time to consider the ultimate in downsizing – selling your home and the majority of your possessions to finance your excursions. This is not a decision to make lightly, however, so take several months to investigate all the details involved, speak with your family and friends and consult with your financial advisor. Another option is renting your house out while you travel: a good option if you want to return home eventually.
Budget-Friendly Retirement Travel
While flying first-class to a luxury hotel is certainly enjoyable, it isn’t normally part of a travel-based retirement. Instead, look for options that keep your budget under control. Along with choosing destinations that are known for low cost of living and staying in inexpensive lodgings, you can cut costs in many other ways.
- Try a repositioning cruise. Cruise lines offer these discount trips when they need to move a ship from one port to another, usually during the off-season. Unlike typical cruises, the ship will not return to the port of origin, but will stop at several ports on the way to the end destination.
- Volunteer. If you want to do good while seeing the world, consider a volunteer vacation. Options range from two years in the Peace Corps to a few days spent working in the fields of an organic farm, and just about everything in between. Generally, you’ll pay a set price that covers your food and lodging during the volunteer stint, usually much less than the trip would cost otherwise. There are volunteer vacation opportunities all over the world.
- Work as you go. You can replenish your bank account by working during your travels. Teaching English abroad, writing a blog or book based on your experiences, working as a virtual assistant or other online jobs and starting a small import/export business are all possibilities.
- Swap houses. If you aren’t selling your home, put it to work supporting your travels. The typical house swap involves you and another homeowner moving into each other’s house for a stated period of time. It’s a great way to vacation abroad if you want to stay a week or more in one location. Sites like International Vacation Home Exchange make it easy to find an available home and provide safety measures for your peace of mind.
- House sit. Cover the cost of your lodgings by house sitting for a family that is doing some traveling of their own. In return for staying in the home for free, you might be expected to take care of pets, water plants or perform simple maintenance. Check out TrustedHousesitters.com to get a feel for house sitting jobs around the world.
The Bottom Line
While some retirees are happy to spend time relaxing at home and visiting with friends, others long for a more adventurous lifestyle. If you fall into this category, and you’ve always dreamed of seeing the world, a retirement spent circling the globe might be the answer to your dreams. But before selling your possessions and buying a plane ticket, you’ll need to take an honest assessment of your financial situation, your travel goals and your daily budget. Have a talk with your financial advisor early in the decision-making process so you’re clear on the best way to maximize your money. Bon voyage!