How to Save Enough to Fulfill Your Travel Dreams
Travel is a top goal in retirement, yet most boomers haven't mapped out a plan to pay for it
Two facts about boomers and travel are frustratingly out of whack: Our love of travel figures prominently in our future plans and we aren’t taking the right steps to insure we’ll be able to take the trips.
Earlier this month, the Transamerica Center for Retirement Studies (TCRS), in collaboration with the Global Coalition on Aging and the U.S. Travel Association, released a study that looked at how people plan and save for their retirement travel dreams. And while the findings make it clear that travel is indeed one of our big dreams, our attempts to realize it is somewhat of a nightmare.
(MORE: How to Calculate the True Cost of Retirement)
Planning for the Future Now
According to the study, which polled 1,500 adults in October 2013, 59 percent expect to travel during retirement, a goal that was second only to spending time with friends and family.
Of those surveyed, 70 percent said taking big trips is a goal worth saving for. Nearly half (47 percent) agreed with the statement that travel is so important to them that it is a necessity, not a luxury. Yet despite the value Americans impart to travel, only 15 percent place a high priority on actually saving for this expense.
Then the survey drilled down to see just how well (or poorly) people are doing in the money-saving department. A mere 4 percent have a savings account dedicated for travel. Some 14 percent “have explicitly factored travel into their overall savings strategy.” The majority — 54 percent — has not done that, but expects their savings to cover anticipated travel; 28 percent either don’t plan to travel or didn’t respond.
What’s particularly sad is another fact the survey turned up: When asked what they would have done differently, saving for travel topped the list.
(MORE: The Hottest Trends in Boomer Travel)
More Than Just a Pleasure Cruise
Visiting new places is entertaining and it widens our cultural horizons, but the TCRS survey also found that people believe that travel is physically and psychologically beneficial. And there’s good science to back that up. Studies show that travel improves your mood, strengthens your connections with others and reduces stress. In fact, according to the Mayo Clinic, not taking a break from life’s daily stressors can elevate levels of cortisol in the body, which accelerates the aging process.
Need a little more ammo to plan a vacation? Consider this: The long-running Framingham Heart Study found that women who vacationed every six years or less had a significantly higher risk of developing a heart attack or coronary death than women who traveled for pleasure at least twice a year.
And truly positive better news: Brain research shows that regular participation in social or leisure activities, including travel, is associated with a lower risk of dementia.
How to Start Saving for a Lifetime of Travel
Take a page from Kate McCulley’s travel playbook. As the globetrotting Millennial described in her blog, Adventurous Kate’s Solo Female Travel, she began with the goal of touring Southeast Asia for seven months. After crunching the numbers, McCulley determined that she needed $12,500. She started at close to zero in February 2010, but by putting herself on a strict budget and being fiscally creative, she was able to meet her goal in seven months.
Granted, she’s young, single and possibly more flexible than many of us boomers. But I found her methodology highly inspirational and wanted to share some of the highlights. Perhaps it will motivate you to figure out how you can join the ranks of folks in the TCRS survey who reported having a plan that’s likely to fulfill their travel goals throughout their retirement.
After calculating her essential expenses, McCulley broke her "magic number" down into monthly installments and began to assess where she could most easily cut back, starting with fancy dinners in restaurants, taxis and shopping sprees. She also decided which sacrifices she was willing to make to save money, such as giving up her gym membership.
This approach is most helpful for immediate objectives. But once you get into the groove of cutting back, you can keep the momentum going by putting the savings into a dedicated travel account.
Adventurous Kate also made some changes in how she dealt with her cash flow. Every payday, she immediately transferred her targeted amount of directly-deposited funds into a special account she’d opened just for travel. She built in some wiggle room and occasionally had to transfer money to cover unexpected expenses, but by and large kept herself on the straight and narrow.
Along with specific and helpful tips, Kate offered one final observation that I’m going to print and tape to my fridge as a daily reminder: "Saving money is not easy. It takes work and it takes sacrifice. I lived a very difficult life for several months. But it was absolutely worth making my dreams come true."