Balancing your travel dreams and your money in retirement
So you’ve retired, and received that last pay check from full time employment. What’s next?
“This is all the money I will ever have”, one of our clients said to us when they had reached their financial freedom number and were able to stop working full time. But with some good savings and spending habits, together with a sound investment strategy; your money can last for your lifetime and be passed onto the next generation.
When you retire, it’s best to remember that you are investing for the rest of your life and as a result ensure that you have a balance of both growth assets (shares and property) and defensive assets (cash and fixed interest). Whilst the later, cash in the bank isn’t returning much right now, it will provide you with the security of knowing that you will have enough to pay for your spending over the next 2-3 years.
Like most people, when you start retirement it’s a wonderful time to look forward to planning that first big trip. And so the questions begin:
- Where will it be to?
- How long are you travelling?
- Who are you travelling with?
- How much do you need to do what you want to be doing?
- And more….
There is no point in working hard all your life, just to stay at home when your goals have been to travel the world. So how can you be prepared?
Consider all the costs to do the things you want to do, whether it’s a bunch of day trips and places you want to visit, or dinner in the local tavern or in a high end restaurant. You need to consider ALL the costs so there are no surprises. Yes, you need a ‘Budget’; I know it’s that dreaded budget word but it’s always best to ensure that you know what you are spending on each trip. There is nothing worse than getting caught short because you’ve overspent or missing out on some of your other plans because you’ve spread yourself too thin.
Many of our retired clients choose and want to do most of their travel, when health and fitness allows, in their early years of retirement. They will have a living expenses plus travel budget, but their travel spending say 15 or 20 years down the track is just not used to the same extent.
International travel becomes more costly once you reach 85 with insurance and so local holidays within Australia become more appealing.
After years of helping people ‘Retire Right’ we collated some key considerations before setting out to discover the rest of the world:
- Do you really love to travel, or just take vacations?
- Consider where you want to travel and how long each trip will be. It’s good to also take into consideration your obligations to family at home and your state of health.
- When reviewing how long you will be away from home, things like packing, flying, finding accommodation all take time and after a while can become tedious. Often shorter trips can be more enjoyable than 3 months away.
- Review on-line the costs, airfares, accommodation, local travel costs, day tours and living expenses. So that you can have a ‘daily allowance’ worked out.
- Keep watch for special offers airlines such as double status credit promotions or 2 for 1 deals at certain times of the year; these can often make your dollars travel further.
- Don’t blow your travel budget all in the first couple of years, otherwise you might find yourself spending more time at home and less time traveling because you’ve run out of money.
- Do you love to cruise and don’t have a lot of excess cash, then you might consider a re-positioning cruise. Cruise lines offer 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.
- Swapping houses is another great way of seeing another part of the world for minimal accommodation expenses. 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. Remember the movie “The Holiday”.
- House sitting is another option, and helps cover the cost of your accommodation 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.
Whilst we all love the idea of being spontaneous and heading off to our dream destination, the truth is if you want to Retire Right and do those dream holidays then you need to plan ahead. If your travel “taste buds” have been tempted, the above are just some of the ways that you might be able to review your travel and what’s next on your retirement bucket list.
Maybe it’s time for you to chat to the JBS Financial team on how they can help you.
Jenny Brown