Retirement Answer Man Travel in Retirement: Creating a Budget
If you want to travel in retirement then you’ll have to go about creating a budget first. In this episode of Retirement Answer Man, I’ll walk you through the basics of creating a travel budget. You’ll learn how to categorize the types of travel you envision and then you’ll discover how to break down your expenditures. Check out this episode to get into the traveling mindset so that you can travel without the worry that you’re doing something you can’t afford.
How can creating a budget for retirement travel allow you to travel without regret?You know you want to travel in retirement, but how much should you spend on travel? One way to begin to budget for travel is to divide your retirement travel into separate categories. First, you have car trips, plane trips, and weekend getaways. Next, come the annual vacations. Then you have your extraordinary trips or bucket list items. Once you have your travel categories laid out then you can take a SWAG (A sophisticated, wild, awesome guess!) at how much they may cost. At this point in time, there is no need to dive too deeply into counting the cost.
Top-down or bottom-up?What is a reasonable amount you can expect to spend over life’s normal expenditures? And just how do you go about budgeting for a trip you have never taken? Well, there are 2 ways you can choose from. The top-down approach is taken when you find an amount that you are comfortable spending and you fit your trip into that financial constraint. The choices you make will be influenced by the amount you decide is right.
If you like a more detailed analysis you may prefer the bottom-up approach to budgeting. This involves estimating your expenses for each individual line item. You consider the costs of transportation, lodging, eating, and entertainment and then build your budget around those factors. The advantage of this method is that it is specific and you will understand how much you spend on each. How do you traditionally budget for vacations?
How do you pay for vacations in retirement?So now that you understand how to create a budget for your retirement travels, how do you actually pay for it? In retirement, the only paycheck you have is the one that comes from your savings. There are a few ways you can go about paying for your trips in retirement. You can add the amount you need for next year’s travel to your cash reserves. Some people opt to do part-time work with their paychecks earmarked for travel. This gives them peace of mind that they aren’t dipping into their nest egg. How will you fund your retirement travel?
What do you do if you suddenly come into money?On our new listener questions segment, one listener asks what she should do now that she has suddenly and unexpectedly come into a large amount of money. People are quick to offer advice and want to help you decide what to do if you come into newfound wealth. But my first piece of advice is to take some time and breathe. Just let the money sit in the bank until you are ready to decide what to do. When you’re ready, then you can choose a team to help advise you on taxes and finance. Check out 6-Shot Saturday to find the questions you should be asking when you interview potential candidates. And listen in to find out why you need a fiduciary on your side to help you come up with a financial strategy that matches your goals.
OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN HOT TOPIC SEGMENT- [3:12] How do we budget retirement dreams to travel without regret?
- [14:00] How do you pay for the trip?
- [21:10] What do you do when you suddenly come into money?
- [29:11] Fund 401K each year?
- [30:00] How to determine the value of a pension?
- [34:45] What is the difference between social capital, human capital, and financial capital?
- [37:00] Start thinking about your ‘word’ for 2020
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