
You’re in your 50’s or 60’s working hard, saving money, paying off debt and doing everything to prepare for an enjoyable retirement. You always wanted to travel more, but with a tight work schedule, and kids, it was not possible for many years.
But now, when you’re an empty-nester and getting closer to retirement you started daydreaming again. This dream is about how to quit work, sell the house, pack a suitcase and head out into an adventurous life of travel. And it crosses your mind more often than ever.
But before you get on a life of travel, you need to find out if you’re financially ready for this kind of life.
These 5 tips will help you to determine if you can afford to travel the world in retirement and how to create a travel budget for your trips.
1. Envision your retirement years
How do you envision your retirement years? Are you going to relocate to a warmer place, join the country club and play golf 5 days a week with one exotic vacation trip per year? Or you’re planning to retire in place and go on extended trips to see your family and friends.
Maybe your idea of retirement is to have a more adventurous life – to sell all your possessions and live the life of senior nomads exploring the world.
Any kind of life you choose in your golden years requires the decision of how to pay for it. In retirement, you live on a fixed income, and you’ll need to have enough savings to pay for any travel and leisure activities.
It means you need to create a travel budget first.
2. Calculate how much to spend on travel in retirement

You know that you want to travel in retirement, but how much you can afford to spend on it? To come up with the answer and estimate your travel budget you need to start by taking an honest look at your finances.
First, calculate your current expenses and get the idea of your cost of living in retirement. Then find out the size of your nest egg.
Take an inventory of retirement accounts including 401(k), IRAs, Roth IRAs. Then add to that number all your savings from the bank checking and savings account, your investment accounts, and any income from rental properties or business. The final number will show how much is your current nest egg.
When you stop working you expect to receive an income from several sources:
- Social Security retirement benefits
- Pension plans – if you’re a lucky one
- Retirement savings – your nest egg
Use a 4 percent rule of thumb to calculate how much retirement income you can generate from your savings. As a general rule, you can withdraw 4 percent of your nest egg each year without worry of running out of money in retirement.
For example, your total estimated nest egg is $600,000. Based on the 4 percent rule, you can withdraw $24,000 annually from your retirement savings.
Your total retirement income includes a combined income from your Social Security, pension and calculated withdrawals.
After estimating how much you will spend on basic living expenses like housing, transportation, food, insurance, and medical cost in retirement, you’ll find out how much money will be leftover each year.
For example, your estimated retirement income from your nest egg and Social Security is $60,000. Your basic living expenses are $40,000. You’ll have $20,000 leftover each year, and you can spend it on travel without taking any extra money from your other savings.
Related Post: 3 Best Ways to Generate Retirement Income
Related Post: Social Security as a Retirement Income
Related Post: 7 Easy Steps to Help You Set Up a Budget
Related Post: What Is the Source of Your Income in Retirement?
Related Post: Why Predicting Retirement Expenses is Important?
3. Create the categories for future travel

The key to any successful travel is to plan ahead of time. After calculating how much you can spend on travel, the next step is to divide your travel ideas into separate categories.
I would recommend creating the categories or groups for your future travels:
- Weekend getaways
- Road trips
- Camping trips
- 3 to 5 days of mini-vacation
- Cruise vacation
- 1 to 2 weeks of international or domestic trips
Are you planning to have an annual vacation with your family? If yes, this might be a separate category in your travel budget.
If you have a retirement bucket list or just list of places you want to visit, put it as a separate category.
After you laid out all categories you want to know how much they might cost.
4. Estimate the travel expenses

If you’re in your 50’s or 60’s and still working, you have lots of time ahead of you. But keep your traveling vision in focus. Start mapping out the details of your travels. Think about what you want to do every day of your trip.
You should talk to your spouse or partner and decide how many travel trips you want to have per year and calculate if you can afford it. It’s important to figure out what kind of trip is more important to you and then find out an approximate total cost.
Related Post: Here’s How to Travel the World in Retirement
World travel doesn’t come cheap and if you envision going on 1 to 3 months international or domestic trips, you need to do some preliminary budget planning.
Think of every step involved, including flights, accommodations, local transportation or car rentals, groceries and eating out, entertainment, and insurance. You’ll need to have a hefty nest egg if you like to stay in chic hotels while traveling through Europe or North America.
But if you are willing to stay in modest accommodations like rented apartments or budget hotels and use public transportation instead of rental cars, you can travel inexpensively.
When you go on long-term travel, you’ll have the same basic needs as you do at home. Do your research and get the idea of how much the adventure will cost rather than just guessing at it.
After you created a list of your future trips, write beside each item what that is going to cost. Then build your travel budget around those numbers. When planning for long-term travel in retirement don’t forget to leave a room in your budget to pay for your household expenses. Even you’re exploring the world, you’ll still need to pay for your cost of living at home – mortgage or rent, utilities, insurance, phone, and more.
A website like Numbeo.com will make it easy for you to figure out the cost of living in different countries.
Many websites provide excellent travel deals. You can get discounts on flights, hotels, and cruises from Kayak, Vayama, Cheap-o-air and Google Flights.
During the travel, the cost of the accommodations is the highest besides the plane tickets. A website like Airbnb helps to find comfortable and less costly accommodations for travelers. VRBO is a great source for finding vacation-house deals.
Many cities in the world offer discounted public transportation passes for a day, a week, or a month.
If you read my blog, you already know that Roman and I love to travel. We constantly talk and discuss our future travels. Right now, our vacations usually include 1 or 2 international trips, a couple of weekend getaways and sometimes a short domestic trip for 3 to 5 days.

We are still working full-time and our regular paycheck helps to pay for our travels. Moreover, we set up a separate bank savings account and save money there each month diligently. The money we saved is part of our current travel budget. When we travel, we like to splurge and allow ourselves to spend money on boutique hotels (if we can afford it), all-inclusive resorts or cruise vacations.
Once we retire, we’ll be living on the reduced income and our travel budget will be different. Our retirement bucket list is long, and we want to travel and explore the world, go to places we have never been to before. So far, our estimated travel budget for retirement is $30,000 per year.
We would like to start our retirement by traveling to Europe. We are planning to have two trips per year and each trip is up to 90-days, so we don’t need to apply for a long-term visa. Our travel budget is $15,000 per trip.
If cannot afford two trips per year we will have to scale it down to one 90-days trip to Europe. Then we can visit other countries and travel to more affordable places like Southeast Asia or South America.
With a limited travel budget, we will have to change our travel habits. We are planning on staying at rental apartments, using public transportation, buying our groceries, cooking our meals and scheduling our trips for during the off-season.
5. Decide how to pay for travel in retirement

Once you’ve figured out the cost of travel and your retirement income, you’ll need to take a serious look at your numbers and decide how to pay for your trips in retirement. If you want to accommodate regular or full-time travel and don’t have enough funds, you need to start saving more money now.
Save more money
Open a separate bank savings account, call it “travel” and start stashing money there regularly. Even $50 or $100 a month will help with funding your future travel.
Sell your home
If you’re planning to be on a road for a year or more, it’s time to discuss the downsizing to finance your trips. Selling your home, your cars and a big part of your belongings is not an easy decision, but it will help to increase your travel budget.
Rent your home
Another option is renting out your home while you travel. The rental income will help to pay for some of your cost of living at home and the cost of your trips.
Swap your home
House swapping is another way to afford travel in retirement. If you’re not planning to sell your home, you should put it to work supporting your travels. The house swap means you and another homeowner moving into each other’s house for a scheduled period of time. It may seem like too much hassle or too risky option for many people, but it’s a great way to travel around the world and stay in places for free.
Work part-time
Some retirees like to work part-time with their paychecks set aside for travel. This gives them peace of mind that they are not reducing their nest egg.
Related posts:
The 3 Buckets Strategy for Retirement Income
5 Ways to Reorganize Your Life to Afford Retirement
Smart Ways to Take Money Out of Retirement Accounts
5 Easy Steps to Calculate Your Retirement Income Gap
Putting It All Together
How do you create a travel budget for your future trips in retirement? What is a reasonable amount of money you can spend? It’s all depends on your retirement income. Everybody is different and we all have different spending habits.
If you’ve always dreamed about traveling the world or even retire abroad, you’ll need to take an honest look at your financial situation and your travel goals. I think the priority is to find an amount of money you’re comfortable spending and then fit your travel into your financial limitation.
How will you pay for your retirement travel? Did you think about setting up a travel budget for retirement?
Enjoyed this article? Make sure to hit that sign up button for more articles like this!
Leave a Reply