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:
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.
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!