How to budget for travel in retirement

When we think of retirement, we often imagine ourselves exploring the globe in addition to also taking advantage of the seemingly limitless amount of free time we suddenly have on our hands.

In some regards, retirement can be the ideal period of life for travel, since work-related constraints go out the window. On the various other hand, because most seniors are on a fixed income, affording those trips can be often easier said than done. Throw inside fact which retirees don’t tend to do a Great job of budgeting for travel, in addition to also which’s no wonder so many find themselves financially stressed down the line.

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Specifically, retirees today are finding which travel expenses are 40% higher than expected, according a Capital Group study. Worse yet, 58% of seniors don’t budget for travel in retirement at all, or so reports Merrill Lynch.

If you’re hoping to see the earth once your career comes to a close, then budgeting for which ahead of time can be crucial. Here’s how to start.

1. Figure out how much money you can spend on travel each year

which’s pretty much impossible to plan your trips without a solid sense of how much money you have available to spend on them. As a general rule, you can withdraw about 4% of your nest egg’s value each year without having to worry about running out of money in retirement. If your savings balance totals $2 million, This specific gives you about $80,000 a year to work with.

Of course, you’ll need to subtract taxes (unless your savings are housed in a Roth account) before you do anything else, since 401(k) in addition to also IRA withdrawals are considered income, which the IRS will want a piece of. via there, you’ll need to estimate your basic living expenses, like housing, food, clothing, in addition to also healthcare. Once you’ve accounted for these essential costs, you’ll see how much money you’ll have left over each year for travel.

2. Prioritize your trips in addition to also understand their costs

Once you get a sense of how much you can afford to spend on travel, your next goal should be maximizing which money — specifically, by identifying the trips which are most important to you in addition to also getting a solid sense of how much they’ll cost. Whether you decide to research your trips independently or through a travel agent can be up to you, yet the key can be to get an accurate estimate of how much each adventure will cost rather than just guessing at which.

Imagine, for instance, which during your first year of retirement, your primary goal can be to spend two weeks in Tuscany, yet you’d also like to take a Caribbean cruise. If you estimate the former at $4,000 in addition to also the latter at $2,000, yet you end up being off by several thousand dollars, you may have to forgo which cruise the first year. yet if you take which cruise first in addition to also then come to find which you don’t have enough money left over to swing which Tuscany trip, you could end up disappointed.

One various other thing: which pays to think ahead when mapping out your retirement travel goals, in addition to also bump up those trips which are more physically demanding than others. After all, you’ll probably have more energy to hike the Inca Trail at, say, 68, than you will at 74.

3. Add a buffer

Once you determine how much your dream trips will cost, which pays to see if there are any senior discounts out there you can snag. You never know when you might catch a break on car rentals, meals, or even hotels. which said, which’s even more important to build a buffer into each trip’s budget to account for the unknown.

For example, you might reserve a cruise in addition to also assume you’ll spend the bulk of the week enjoying which ship’s free activities. yet what if a few last-minute excursions end up catching your eye? Those can be expensive, yet they might also represent once-in-a-lifetime opportunities, so leave yourself some wiggle room.

Similarly, assume which incidentals like taxis in addition to also tips will end up costing more than expected. Finally, invest in travel insurance. which’ll cost you more, yet which’ll also offer some degree of protection if your plans are disrupted or you encounter a health issue which forces you to cancel or alter your itinerary.

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Traveling during retirement can make your golden years extremely meaningful in addition to also rewarding. Just be sure to budget for which accordingly generating sure which which doesn’t wreck your finances at the worst possible time.

sy88pgw (brand-new York) First published February 5, 2018: 11:33 AM ET


How to budget for travel in retirement

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