Many seniors dream of traveling throughout retirement, but unfortunately, extensive traveling takes money that some retirees just can't afford. According to human resources consultant Aon Hewitt, younger baby boomers aged 46 to 54 will need to have about 14.6 times their final salary saved to maintain a similar lifestyle in retirement. That means that an employee making $60,000 a year pre-retirement should have $876,000 accumulated in retirement savings to maintain the same lifestyle they had while working (which likely did not include frequent leisure travel).
If cash is short, there is one valuable benefit to retirement: increased flexibility and time. Used to your advantage, there are still plenty of ways to travel through retirement, on a budget.
TUTORIAL: Increased Retirement Savings Opportunities
House sitting can significantly reduce travel costs for retirees who are willing to stay in one place for a period and watch another person's residence while they're away. House sitting assignments generally do not pay, but the benefits to the house sitter are free accommodations, the ability to move to new locations easily, and a chance to settle into a "home away from home" while vacationing - at least for a little while.
In house sitting arrangements, the homeowner and house sitter will generally formally document who will pay for what expenses, and what responsibilities the house sitter will fulfill. The homeowner may agree to cover some utilities, costs associated with pet care, and home maintenance. In return, the house sitter may agree to pet sitting duties and other light home maintenance. Many homeowners may require that the sitter pay a refundable security deposit to cover any potential damage.
According to Mind My House, a site that matches homeowners and house sitters from all over the world, there is an increased demand for house sitters who are willing to do a bit more to earn free long-term accommodation, such as some light "caretaking" duties, especially for homeowners with multiple properties. For $20 a year, house sitters can search the site's database of homeowners seeking their services. Assignments are located across the globe, from Spain to New Zealand, to various locations in the United States. (Carrying this debt can have benefits if done correctly, but is it worth the risk? See Burdening Your Retirement With A Mortgage.)
Once upon a time, airlines and hotels offered a special discount to seniors. But, the travel industry has changed dramatically since the economy slowed, and significant money-saving deals reserved for traveling seniors have essentially become a thing of the past. However, because retirees have flexibility in scheduling, deals can be found. Sites like Orbitz, Expedia, Hotwire, Priceline and Travelocity allow you to "bid" on excess discounted hotel and flight inventory. Expedia offers filtering options for special needs like wheelchair access. Follow airline carriers on Twitter or Facebook as another means of locating last-minute airfare deals.
Renting a vacation property on the private market can also be a money-saving option, as some owners extend special rates to seniors. Vacation rental site HomeAway offers the ability to enter "senior discounts" into the search criteria to locate deals, and VRBO (Vacation Rentals by Owner) also has vacation rentals offering senior discounts. (Here are some personal finance tips for those who want to live well after work ends. See Life After Retirement.)
Timeshares are generally not a great real estate investment, but they can be a good investment in your travel expenses, if you consider their value in relation to what you will realistically spend renting vacation homes, or at hotels and resorts for the next several years. If you travel frequently and know that you want to return to the same location repeatedly, you can save up to 67% on a timeshare by skipping the developer and buying through the timeshare resale market.
Resale timeshares can often be found online through sites like Craigslist, but there are brokers that handle them as well, to resolve concerns around legitimacy. Reputable sites like TimeSharing Today also include resale listings. The key to a successful timeshare is knowing that the location will be appealing in the long-term, both to you as the owner and to potential renters or buyers.
If you plan to travel frequently and own property in a desirable vacation area, consider renting it while you're away to offset costs. According to MSN Money, you'll need to fill the property with renters for at least 15 to 17 weeks out of the year (or longer if you have a hefty mortgage or monthly condo fee), to cover your costs, assuming that one month's mortgage payment would equal one week's rental income during peak season. If possible, try to manage the process yourself in order to avoid losing money to a property management company that will take a percentage of your rental income for their services. (For more, see Retirement Saving Tips for 65 Year Olds And Over.)
TUTORIAL: A Tour Through the Different Retirement Plans
The Bottom Line
House sitting, timeshares and renting aren't the most common strategies for retirees looking to travel, but they're great options if your retirement savings and income don't allow for jet-setting to five-star resorts for months on end. With many retirement portfolios taking a hit in the economic downturn, it's nice to know that low-cost creativity and flexibility can make your globe-trotting dreams a reality.