When you’ve got your sights set on an alternative retirement lifestyle, planning ahead for how to make it work is a must. For some seniors that means pulling up stakes completely and living life on the road full time. If your retirement dreams center on becoming a nomadic traveler, there are a few things you need to cross off your to-do list before leaving home. (For more, see Retirement Travel: 5 Trips That Cater to Retirees.)
When you want to become a nomad in retirement, your finances are going to require some extra attention. Specifically, you need to be asking yourself the following four questions before your journey begins.
If you own a home, the first thing you have to decide is what you’re going to do with it. There are three basic options: You could sell the home, rent it out or simply let it remain empty on the off chance that you decide to abandon your gypsy ways at some point. (For more, see Should I Sell My Home When I Retire?)
Approximately 4.4 million retirees still have mortgage debt, and if you’re one of them, then selling your home in order to travel may be the right move. Unless you have a deep sentimental attachment to the property or plan to pass it on to your children, selling benefits you in two ways: It can provide you with additional cash to pay for your nomadic adventures, and it relieves you of the burden of having to pay for things such as property taxes, homeowner’s insurance and maintenance.
Going the rental route could generate some income for you each month, but you’ll need to hire a property manager to collect the rent and handle any issues that may come up with the tenant. If a major problem such as a fire or flood occurs, you’ll still be called on to deal with it, which could put a damper on your ability to enjoy your travels. (For more, see The Income Property: Your Late-in-Life Retirement Plan.)
Selling your home and shutting off all of your utilities means fewer bills to deal with while you’re on the road, but there are still some expenses you’ll need to keep up with, such as transportation and lodging. Let’s say you’re moving into an RV permanently. You’ll need to have the right kind of insurance in case you get into an accident.
Health insurance is also a must, especially if your travel plans involve spending time on cruise ships or moving around to different countries periodically. Updating your insurance and paying the premiums in advance will ensure that you’re not left in the lurch if you need medical care for an illness or injury.
If you’ve got a life insurance policy, you’ll want to make sure you’re keeping up with those premiums as well, especially if you’re married. If something were to happen to you, those benefits could come in handy for your spouse, whether he or she decides to continue traveling or find a more permanent place to settle down.
A good way to start is to use your current expenditures as a baseline. For example, if you’re spending $5,000 a month on housing, groceries, food, clothing, transportation, healthcare and miscellaneous expenses, you should aim to keep your travel budget at that same level or below it.
Becoming a retirement nomad requires a lot of planning, but the more prepared you are, the fewer obstacles you’re likely to encounter. Giving your financials a closer look and thinking practically about what needs to be done can make satisfying your wanderlust more enjoyable over the long run.