Travel the world without sinking your retirement plan

Allworth financial advisor Jeremy Murray, CFP®, AIF®, CRPS®, provides actionable strategies to help retirees travel the world while staying within their financial plans, ensuring they can enjoy their adventures without compromising their long-term financial security.

 

For many retirees, travel is one of the top goals in retirement. Whether it’s exploring national parks in an RV, hopping across European cities, or taking the grandkids on a dream vacation, traveling is one of life’s greatest pleasures. But as exciting as it is, frequent travel can feel at odds with maintaining a solid retirement plan.

Here’s the good news: with a little planning and some smart strategies, you can enjoy the adventures of a lifetime without worrying about derailing your finances.

1. Build Travel Into Your Budget

Start by treating travel as an essential part of your retirement spending. Instead of considering it a “splurge,” fold it into your long-term financial plan as a key expense.

• How to Estimate: Think about the type of travel you’d like to do over the next few years. Are you envisioning luxury cruises, or are you more into budget-friendly road trips? Estimate the costs (including flights, lodging, meals, and activities) and set a yearly travel budget.
• Use a Dedicated Fund: If travel is a top priority, create a “travel fund” in a separate account to avoid dipping into your main retirement savings. Automate contributions to this fund, so you’re always ready for your next adventure.

 Quick Tip: Use rewards credit cards strategically to earn points for flights, hotels, and rental cars. Just be sure to pay off balances monthly to avoid interest charges.

2. Balance Flexibility With Planning

Traveling in retirement gives you one key advantage: flexibility. Unlike when you were working, you’re not tied to a rigid schedule, which means you can take advantage of discounts and avoid peak travel times.

• Travel Off-Peak: Airlines, hotels, and even destinations often offer lower rates during shoulder seasons (e.g., spring and fall for many popular spots). Not only will you save money, but you’ll also enjoy fewer crowds.
• Stay Flexible: If your itinerary allows, consider booking flights and accommodations that allow for free changes or cancellations. This can help you adjust plans without losing money.

3. Protect Your Savings With a Spending Plan

One of the biggest challenges retirees face is balancing current spending with long-term financial security. Here’s how to approach travel spending without putting your overall retirement plan at risk:

• Stick to the 4% Rule (With Flexibility): The classic 4% rule is a good starting point for withdrawals, but be mindful of big travel years. If you spend more in one year, consider cutting back in the next to keep your overall plan on track.
• Plan Around Market Conditions: If your portfolio has experienced a strong year, you might have more flexibility for additional travel spending. In years when the market is down, consider scaling back to avoid dipping into investments at a loss.

4. Take Advantage of Senior Travel Discounts

One of the perks of retirement? Discounts galore! Many travel providers offer discounts for seniors, which can add up over time.

• Transportation: Amtrak, Greyhound, and many airlines offer senior discounts or special rates for retirees.
• Lodging: Chains like Marriott, Hilton, and Best Western often have discounts for travelers over 60.
• Attractions: National parks, museums, and other attractions frequently offer reduced rates or free admission for retirees.

Quick Tip: If you’re planning to visit U.S. national parks, purchase a Senior Pass for just $80. It grants lifetime access to more than 2,000 federal recreation sites.

5. Be Mindful of Tax Implications

If you’re funding travel with retirement account withdrawals, it’s important to be aware of potential tax implications. Every dollar withdrawn from a 401(k) or traditional IRA is taxable income, which could push you into a higher tax bracket.

• Plan Withdrawals Strategically: Work with your advisor to map out tax-efficient withdrawals for travel. If possible, tap into Roth accounts or taxable accounts to avoid a tax hit.
• Watch for Medicare Premium Increases: Large withdrawals can also affect your income-related Medicare premiums. Staying mindful of your total income can help you avoid surprises.

6. Consider Travel Insurance

Unexpected events—whether it’s a health issue or a canceled trip—can quickly derail your travel plans and your budget. Travel insurance can provide peace of mind by covering costs for trip cancellations, medical emergencies, or lost luggage.

• What to Look For: Choose policies that include medical evacuation coverage, particularly if you’re traveling internationally.
• Use Credit Card Protections: Some rewards credit cards include travel insurance benefits, which can reduce your need for a separate policy.

7. Prioritize What Matters Most

Finally, remember that travel doesn’t have to break the bank to be meaningful. Whether it’s a month-long trip abroad or a weekend getaway with loved ones, the memories you create will always be more valuable than the price tag.

Consider combining big trips with simpler pleasures, like visiting local attractions or staying with family. You don’t have to do everything at once—spreading out your travel plans can make them more affordable and just as enjoyable.

Final Thoughts: Travel Smart, Live Fully

Retirement is your time to explore and enjoy the world you’ve worked so hard to see. With a thoughtful approach to budgeting, planning, and spending, you can embark on the adventures of a lifetime without sacrificing your financial security.

If you’re ready to start planning your next trip—or want to discuss how travel fits into your overall retirement plan—I’m here to help. Let’s make sure your retirement years are as fulfilling and stress-free as possible.

Jeremy Murray, CFP®, AIF®, CRPS®

Partner Advisor

As a self-proclaimed “numbers guy”, I truly enjoy helping people make sense of something that can feel complicated and overwhelming. Most people don’t grow up learning financial literacy and wealth management. Yet, getting your finances in order is critical as you prepare to transition to retirement—a phase in life where you’ll be entirely financially independent.

 I believe money is a tool that can be leveraged to provide the freedom you what. And I always strive to meet clients where they are in life, focus on educating them about their choices, and work to build a plan that’s achievable, comforting, and aligned with their goals.

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