Retirement Travel: Make the Most of Your Travel Dollars
Many retirees are happy staying close to home, enjoying family and taking life easy. But many others are motivated by a certain wanderlust—a desire for a more adventurous lifestyle while they’re still physically able.
You’ve worked hard to accumulate wealth that will enable you to live comfortably in retirement. Now you have the time, freedom from structured responsibilities, and the resources to see the world! Here are some questions, suggestions, and tips for you (and your travel partner) to consider for planning your future travel:
1.Decide what kind of traveler you are. Do you really love to travel? There is a big difference in taking one or two quick vacations in the U.S. each year (e.g., 5 to 10-day trips to see your kids and grand-kids), versus maintaining a travel lifestyle, with multiple, multi-week overseas trips each year. Neither is right or wrong; it’s just important to be honest with yourself (and each other, if you have a partner/spouse).
Are you flexible regarding dates, and content to “go with the flow” when flights are delayed or cancelled, and other things don’t go as planned? Can you arrive at a destination with only the first few nights’ hotel booked, and wait to “see where the trip takes you” the rest of the time? Or are you pretty rigid about want everything planned out well in advance? Are you willing to work within the constraints (e.g., limited telephone, wifi access, health care, etc.) of extended or remote travel?
2. Assess your financial situation. Making the transition from paid employment to retirement living can be a far greater adjustment than many people expect. Watching and budgeting your expenses is a new exercise for many retirees, but knowing how much you can afford to spend on travel is important. Start planning before you retire, looking into the cost and logistics of trips you want to take, in light of how much you can afford.
Financial planning can be an invaluable tool in helping you set realistic travel goals. With the aid of a Personal Financial Plan (PFP), your financial advisor can help you decide what you can afford without jeopardizing your financial future. In fact, part of creating and updating a PFP is evaluating and quantifying the long-term financial impact of different travel budgets.
Following are some important financial questions:
- How much do you anticipate spending (including, for each trip, a financial cushion for unforeseen expenses):
- Every year for the foreseeable future (e.g., trips to see the kids/grandkids)?
- For “extra” travel during the first 5-10 years after retirement (e.g., big overseas trips that you’ve put off during your working years)? It makes sense to plan some of those big trips for the years right after you retire, while you’re still healthy enough to walk the museums and climb the ruins.
- Where will the money come from? Will you be able fund this travel from your retirement income (Social Security benefits, company pension payments, and/or reasonable and sustainable withdrawals from investments)? Will you need to tap into other resources(e.g., spend some of your investment principal) to afford certain trips, especially those big ones?
- Long-term impact – how will funding your travel goals impact your overall financial picture 10-20 years from now? A financial plan will help evaluate that.
3. Assess your health. Check with your doctor before making long-term travel plans. Knowing your limits (e.g., how far can you walk/hike?) and being in good enough health to cope with the rigors of travel will make a trip more enjoyable. For overseas travel, be sure to check the Center for Disease Control and Prevention (CDC) website to find out if/which immunizations are needed: https://wwwnc.cdc.gov/travel/destinations/list/
4. Travel Insurance. Particularly if you or your spouse have known medical conditions that might flare up and cause you to cancel the trip, it is a good idea to purchase travel insurance that covers those pre-existing conditions. A good one-stop website for travel insurance is www.insuremytrip.com – it compares policies and coverage from most insurers.
There are two major types of travel insurance, each covering different aspects of your travel:
- Trip Insurance – This is the most common type of travel insurance; it covers you for trip interruption, trip cancellation (e.g., if you can’t go because of your health), baggage loss, and accidental death (i.e., life insurance, in case you die in a plane/bus/train crash on the trip). It comes in two forms:
- Single Trip – that covers only the dates you’re gone on a single trip;
- Multi-trip Annual Plans – if you travel a lot, these plans are probably a better choice, although the benefits they pay are often limited to one amount for the entire year, not that amount per trip.
NOTE: Most trip insurance plans do not cover pre-existing conditions; policies that will cover them generally must be purchased within 24-48 hours of making your first payment or deposit on the trip (tour, cruise, airfare, etc.).
b. Travel Health/Medical Insurance – Medicare does not cover health expenses incurred outside the United States, and neither does regular trip insurance (the preceding type), so if you take extended (or many) trips, you might want to buy travel health (also called travel medical)insurance to cover overseas medical care, emergency evacuation, etc.
5. Utilize Travel Apps. There are many great travel apps that will help you plan, organize, and enjoy travel more. Here are just a few:
- Languages – Duolingo will help you learn a foreign language, and Google Translate can help you while on your trip (it even lets you to snap a photo of signs and it will translate them into English!).
- Itinerary/Flights – these apps create and track your itinerary, and more. They automatically pull (from your email inbox) the details of all travel email confirmations (from airlines, hotels, rental cars, cruises, etc.), and create an itinerary for you, as well as for fellow travelers or interested parties. TripIt is a great one, and it can be used on your computer as well as your phone or tablet. App in the Air is newer, and only available on mobile devices, but it tells you the current wait time for your flight’s check-in, security and customs; it can also use augmented reality to tell you if your bag will fit in your flight’s overhead bin!
- Other good apps help with the tasks implied by their names: Elk Currency Converter; Culture Trip; and Lounge Buddy.
6. Trusted Traveler Programs. You don’t need to fly very often to make expedited security clearance worth the cost. There are several different U.S. trusted traveler programs for pre-screened members; here are the main ones, and cost of each (for a 5-year membership):
- TSA Pre✓ is the simplest, most common program; it provides expedited security screening for most flights from U.S. airports. Cost: $85.
- Global Entry* includes the TSA Pre✓ benefit, plus expedited US customs screening for international flights entering the United States. Cost: $100.
- Nexus* is for expedited entry into the U.S. from Canada. Cost: $50.
- Sentri* is for expedited entry into the U.S. from Canada and Mexico. Cost: $122.50.
* Note: a Global Entry, NEXUS, or SENTRI membership number also serves as your “Known Traveler Number” for TSA Pre✓® airline reservations.
7. Rewards Plans. Failing to pay attention to airline and hotel rewards programs can be like throwing away thousands of dollars a year.
- Never take a flight or stay at a hotel without getting points. Most hotels and airlines have many “partners.” So, even if you don’t intend to fly or stay with that company again, have them credit your flights or stays to a partner program that you do use often.
- Credit Cards. As a retiree,
you shouldn’t be taking on more debt just to take vacations. However, as long as you have the money to
cover the cost of the trip, and you pay off your cards in full every month, using
“rewards” credit cards is an easy way to earn cash back, free hotel stays and/or
free or upgraded flights. Consider having at least one card affiliated with a:
- Hotel (e.g., the Marriott VISA, which earns points that can be transferred to airlines or used for free nights at more than 20 hotel chains, including Westin, Sheraton, Ritz-Carlton and Marriott); and
- Airline (e.g., Alaska Airlines VISA, or Delta Amex) tied to your favorite airline’s frequent flier program.
- Rewards zealots. If you want to really try to maximize rewards plans, visit a website run by people who’ve made a science of earning and using rewards points, such as LoyaltyLobby.com, MileNerd.com, AwardWallet.com or ThePointsGuy.com.
8. 13 More Little Tips. Once you establish your travel budget, how long you’d like to be away, and when you can go, you can begin nailing down the specifics of your next dream vacation. Here are some tips to help your travel be more rewarding and economical, so that your travel dollars go further (and farther, as well):
- Plan far in advance. Ocean and river cruises, for example, often offer big discounts if you book a year or more in advance.
- Or don’t; watch for last-minute bargains. If you can pick up and leave on short notice, you can get amazing deals on tours and cruises in the weeks just before they leave, since they often slash prices to fill open spots.
- Travel during the off-season. Now that you’re retired, you have more flexibility, and travelling during off-peak times can really work in your favor. It can save you both money and time, as less crowds mean shorter lines and lower prices on hotels, tours and attractions.
- Go on fewer, but longer trips. Typically, one of the most expensive parts of travel is airfare. To make the most of that expense, try spending three to five weeks overseas for each big vacation.
- Join a group. Groups often receive discounts and perks that would otherwise cost extra, such as educational sessions, priority access and tour guides.
- Bring friends. Find some travel companions. Sharing with another person or couple may bring down the per-person cost for everyone, and make for a more social experience.
- Skip the rental car. Stay within walking distance of attractions in big cities. Renting a car for just a day or two (for more distant sights), and walking or taking day tours the rest of the time, can help save overall costs. Most big cities also have great public transportation, which they’re happy to help you learn to use.
- Use your age. Look/ask for senior specials and discounts. Show your AARP card. Many hotel chains have senior discounts and reward programs that can be worthwhile, or you can use military or AAA discounts if those are better.
- Call the hotel/resort directly. Try calling and working with the lodging staff, rather than always using 800 numbers or third-party booking companies (Expedia, Travelocity, etc.). Often, hotels have timely specials that target seniors, teachers or military, but aren’t offered through third parties. They are also often far more willing to modify your reservation if it is a direct booking.
- Try alternative lodging choices. Through websites like Airbnb.com, you can often find less expensive, and more “homey” alternatives to hotels. They may even come with extra amenities (bikes, boats, fishing equipment, etc.) that you can use for free, making them a real bargain.
- Make the most of your food budget. Eat large lunches, rather than dinners; lunch prices are usually less for the same food. Stay in places that include breakfast and ask locals about good eateries off the beaten path.
- Use travel blogs. Traditional guidebooks have their place, but they’re often just full of information (and ads) regarding main attractions & hotels. A travel blog might give you an insider’s perspective and advice on cost savings. Because there are so many good blogs, try Googling “Best _____ travel blogs” (fill in the blank with your main interest and destination, e.g., Hiking, Italy, Cruising, Wine-tasting, etc.) and you’ll likely find several lists of good blogs.
- Learn travel/packing tips. Besides good blogs, there are many useful (and entertaining) videos online. One particularly good source is a YouTube channel called SoniasTravels: https://www.youtube.com/user/soniastravels/videos
We hope that the above information helps you stretch your travel dollars and make the most of your retirement travel. Safe travels!
Viridian is an SEC Registered Investment Advisor (RIA) with clients across the United States. Viridian offers financial planning, investment management, and tax services (through its sister company, Viridian Tax and Accounting). Bruce Yates has been a fiduciary financial advisor for 35 years,and is one of Viridian’s founding shareholders. He travels extensively, not only for business, but for his underwater photography hobby. Co-written with Shannon McCarty, Viridian’s Director of Marketing.