Ask the Readers: I’m Getting Older — Should I Save or Should I Travel?
Published on - June 10th, 2011 (by J.D. Roth) Long-time GRS reader Sheila (aka PawPrint) dropped a line earlier this year because she’s facing a financial dilemma. She and her husband want to be responsible — to save for retirement — but they’re afraid that doing so means they won’t be able to pursue other passions, such as travel. Sheila writes:
My husband is nearly 60. As we watch friends and relatives succumb to cancer (mostly) in their late sixties, I wonder about our financial goals. Should we travel now? Or should we keep saving for retirement at our current pace?
My husband plans to retire at 67, mainly because that’s when he’ll reach thirty years with his company, so the health care cost is cut in half. We’re on target to pay off our house by then (or before), my husband has long-term care insurance (I can’t get it), we have Roth IRAs and traditional IRAs, liquid savings, a few investments, some I Bonds, and he has a 401(k).
When I look at our retirement accounts, it never looks like enough, but I don’t know how much is enough. If we reach 70, I don’t want to do so without having traveled to places we’ve talked about seeing. But then again, if we live for a long time, I don’t want to run out of money. It’s all compounded by the fact that I’ve got a disability that limits my activities and may get worse as I get older. I have no idea if I’ll be in any shape to travel by the time my husband retires. How do people figure this stuff out?
Sheila has two related questions here. Let’s tackle them both.
Time to travel?
Like Sheila, I worry about my future health. As I’ve mentioned before, the men in my family tend to die young. Like at about fifty. (My father died ten days before his fiftieth birthday.) This grim history is the primary reason I’m willing to shell out $200 a month to stay fit. It’s also the driving force behind my desire to travel now, while I’m relatively young.
Kris and I have taken several international trips in the past couple of years. Most of our companions have been in their sixties and seventies. (We’re in our early forties, which is usually about 25-30 years below the average age for the groups we’re in.) Without exception, the older people we’ve talked to have said they wished they’d traveled when they were younger. (Many say they wished that had taken their children with them.)
This unanimous sentiment makes Kris and me more committed to traveling now while we’re young and healthy. We’ve watched our traveling partners struggle with stairs, strain to hear tour guides, and suffer during short walks. We want to travel while we’re able to enjoy it fully.
If health problems are a genuine concern for Sheila and her husband, I’d argue that it absolutely makes sense to budget for travel today. (I’d urge her to use a targeted savings account, like I do.)
How much is enough?
On the other hand, Sheila and her husband need to be sure they have enough saved to meet their future needs. But how much is that, anyhow? How much do you need to save for retirement? Because the future is unknown and unknowable, and all we can do is make educated guesses.
There are hundreds of retirement calculators scattered across the Web, and each one is a little different. No one calculator is necessarily better than any other, but here are a few I’ve found especially insightful:
- T. Rowe Price has an excellent calculator that bases its results on your spending needs.
- The Motley Fool has two useful calculators, one that estimates your retirement expenses and one that lets you see if you’re saving enough.
- Bankrate’s retirement calculator bases its results solely on your savings. (MoneyChimp.com has a similar — but simpler — calculator.)
- Choose to Save provides a ballpark estimate tool that you can use online or off. It’s the best of the calculators that use income instead of expenses.
Really, though, it sounds like Sheila may need professional help. There’s no shame in hiring a fee-only financial planner to walk her and her husband through their finances to be sure they’re on target to meet their goals — both present and future.
The bottom line
Because the future is unknown, there isn’t any one right answer to these questions. The best Sheila can do (or any of us, really), is work to enjoy today while also preparing for the future. It’s a balancing act. The challenge for each of us is to find that point of balance that allows us to pursue our passions today while also letting us sleep soundly, knowing we have enough for tomorrow.
How much will you save for retirement? Have you run the numbers? How much do you need to save? How’d you reach this number. At a lower level, does it make sense for Sheila and her husband to use some of their current savings to travel? Is there some rule of thumb they can use to decide how much to spend and when? Help her figure out what to do!
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“We’re on target to pay off our house by then (or before), my husband has long-term care insurance (I can’t get it), we have Roth IRAs and traditional IRAs, liquid savings, a few investments, some I Bonds, and he has a 401(k).”
Does hubby also get a pension? Does she? I think they should run the numbers! They sound like they may be onb track money-wise, so I wonder what makes her so worried about being able to retire. Its possible that its not really a dilemma at all.
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I’m thinking about the same thing now. I’ll be going on my first vacation in 30 yrs probably and first time to Europe, in August. I’m taking my son with me.
I’m almost 50 and Like you men seem to die young in my family and my health is not looking that great.
It’s the big what if. If I die before or shortly after I retire, or live for 20 more years. What’s the point?
I’d be interested in hearing more about solo travel when you find out.
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Re: Solo Travel
My husband and I do it from time to time. It allows us to travel more since it costs less (kind of) and we would not need a dog-sitter if the other person stays home.
Here is one of his adventures:
http://adventures.bootsnall.com/articles/05-05/belize-in-a-conch-shell.html
Also if you google Solo Travel, you should be able to find a lot of info.
Meeting up with a friend or family member for part of your trip is always a nice addition.
So yes we choose to travel more and might “have to” work part-time during retirement, hopefully doing something we love. We are also striving to have a paid off house among other things to lower future expenses.
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I love to travel and do so every other month to see our far flung family (except this summer it is monthly because of a wedding coming up in the Northwest).
My husband likes to travel OCCASIONALLY. He would much rather stay home and use his allowance to buy wood working tools.
We both substitute teach during the school year for extra $$- which supplements our allowances. I had a gig for three months that will pay our way to Disney World with the grandbaby.
We have a trip to the Mediterranean planned in Feb.
Neither of us ever made much money but he gets a pension that pays all of the bills plus our allowances. We rented the first 16 years of marriage and bought our house with cash (before that was popular).
In our 29 year marriage we have visited 22 countries and every state. Many times it was for work- but sometimes it was because we lived near them.
I would suggest that Shelia save every “overtime” or side business money in a separate account. Add that to a monthly allowance.
Continue to pay into retirement- and then GO! I will never regret seeing the pyramids or riding an elephant.
I don’t really understand your husband’s “half the healthcare thing”. Are you not in the US? Will his company pay for medicare B?
I have saved what we can. Eventually we will sell this house-which is still worth enough to sustain us in a nursing facility if it comes to that. I have a DNR in hand for my 70th birthday…..
I refuse to stop living just to GUESS what tomorrow will bring.
What is the number? 58- that is the age that we had two brothers and a sister in law leave us. Since my husband is already 60- we are going to enjoy traveling and woodworking while we still can.
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I wrote the question before I figured out, doh, the 1/2 the cost applies to people who retire prior to receiving Medicare so working 30 years for the health care benefits isn’t applicable. .
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Sheila, one thing that strikes me when I read about people saving for retirement is that they’re willing to work longer or work part time to afford the luxuries they want (like travel). Either way, you’re paying for travel whether you do it now or in five years time. I agree with J.D.’s advice to sit down and crunch some numbers and see what’s possible.
If you do delay travel, I recommend continuing to invest in your health with good diet and exercise. True, there are older adults who “puff and pant” their way through a trip, but I’ve also met 50+ travellers who cycled across countries (they trained for months), and fitness buffs well in their 70s who look 50 (they train on a regular basis). Many people don’t increase their physical activity ahead of a trip or get enough regular exercise — which can greatly increase energy and mobility.
Also wanted to mention “Journeywoman” — blogger and website owner Evelyn Hannon is still going strong in her 70s, and you’d be amazed at the places she goes! Great inspiration. (I’m not sure if the link will come through, so just google it
Best wishes for your travels!
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My Grandparents are 85 and 86 years old and just went on a trip to Holland last year. They have been traveling every year internationally for the last 50+ years. It is possible. Some of the first things I remember are little presents they would bring back from China etc. I hope to achieve a fraction of what they have done.
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Having lived and traveled full-time outside the U.S. for the last year-and-a-half, I’ve learned (and J.D. is just starting to learn) that we spend waaaaaay too much money on non-important stuff and our idea of what it really costs to both live our lives and to travel the world is equally off.
I have a timely example of our propensity to spend too much. A friend of mine just posted on facebook overnight that she cleaned out HALF of her closet and found SEVEN pairs of shoes she didn’t know she still had. This is a person who posts regularly that she’s out shopping and lists what she buys. People who commented on her update were supportive and offered their own stories of “finding” things that they didn’t remember or knew they had. I can only imagine what else she’s spending her money on and how much debt she has.
Travel is the same. I set aside some of my savings about two years ago and told myself that I would travel until that set-aside money ran out. I figured, based on the “normal” American perspective of hotels, meals out, and airfares, that I had enough for six months. What I learned is that when I left the U.S. my desire to consume went way down and that the longer I stayed in each place the less I needed to live. (For example, I’ve concluded that each time I go somewhere new, it costs me about $1k in “expenses”.) It’s been a year-and-a-half of traveling now. I’ve been to four continents, nine countries, and I’ve spent 60% of the money I had set aside. It could have (and should have) been less but I learned how to travel as i went along.
So I guess what I’m trying to say in too many words is, you need much less stuff than you think you do (therefore you need less money) and travel is much less expensive than you think it is (and therefore you need less money).
Besides, life is in no way guaranteed. Part of why I’m traveling is the loss of people close to me “who died too early” and I’ve heard too many stories (family included) of how so-and-so got Alzheimers/cancer/etc. and they can’t travel now. And, lastly, I can’t tell you how many times I’ve seen older people out traveling where I am and they can’t move easily, can’t climb the stairs, are tired, and on and on and on.
Do it now. You won’t be sorry.
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Great comment! I myself have turned against consumerism in order to travel. I am only 27, but I already realize the need to live my life to the fullest. I have just begun my journey to shed myself of things I don’t need because things don’t make me happy anymore.
Sheila, don’t put off until tomorrow what you can do today. I think we’re here on this Earth to be happy. If you think travel will fulfill your life, do it as soon as you can! No regrets!
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Sounds perfect!!
You story sound similar to some friends I have. One just “bought” 2 new 2011 cars, their cars where 3-4 years old! This same friend makes statements to me on how she and her husband wish they could afford to travel! I tried to explain that travel is my priority and we save for it! Some people just make me wonder…
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That is amazing. Way to go!
And even if Sheila doesn’t have your same sense of adventure, it’s good advice. I personally wouldn’t want to travel for more than a couple of weeks at a time, but that balances well with my semi-consumerism. I have the same car I bought out of college (6 years ago), but I also like cable and my dogs (the Pug is pretty expensive thanks to allergies). In short, Sheila and her husband wouldn’t even have to give up many of their current splurges to afford at least annual vacations.
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Wow, this hits home. Many of my family members have died young (parents at 58 and 63, uncle at 50, cousin at 43) and it really changes your perspective. My husband’s family lives forever (grandfather was 101) and one of the biggest struggles we’ve had is reconciling the two perspectives. We’ve decided to save *enough*, have more than enough life insurance (especially on me) and enjoy the rest.
The plan we follow:
* save 10% into targeted Vanguard 401K plan
* make sure we’re debt free by the time our youngest child is done with college (15 years)
* invest in staying healthy (gym, running races, quality food)
* maintain a healthy emergency fund with regular deposits for future needs like cars and home improvements
* Enjoy the rest!
It really isn’t that hard. We might build more wealth if we pushed to be debt free first. Or put our vacation money into the 401K. Or worked out at home. Or ate cheaper food. But we’ll have enough. And we have enough now. And we’re happy. Isn’t that the point?
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I like your attitude!
I do wonder about 10% retirement savings. Obviously that would depend on what it’s 10% of (which is none of my business!), but I’m saving 27% (with company matching), my husband around 10%, I will have a small pension from a previous employer, and I still don’t think we’re saving enough (and depending on the calculator – that’s a correct feeling).
We will also be debt free (we only have a mortgage) when our youngest is done with college.
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We started saving 10% (plus 6% company match) from our first job, so that’s helped a lot. And we have an annuity from an old pension plan that will provide for us when we first retire so that we don’t have to draw on 401K or SSI until age 70 which will help increase the amount we can draw.
And with no mortgage or debt (or kids at home!) our expenses will be greatly reduced. And we plan future home improvements to help reduce expenses in retirement (slowly getting off the grid, etc)
And we do save 10% to a non-retirement fund. Some years it gets spent (on car or home repairs) and some years it doesn’t. Hopefully we’ll have some of that left after the kids’ college education.
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As I reread my post, it sounds a little flip. I know it’s hard to reach your goals (it took us a while to meet our goals). You need to get help figuring out how to reach your retirement goals, and trust the plan and enjoy the rest of your money.
Sometimes when I read financial blogs I feel like I’m not doing enough with my money. Especially when I read articles about people putting 25% into retirement funds, or retiring at 50, or 40, or whatever. I can feel guilty about our upcoming Alaska trip when I think about how much money I would have if I invested that money in a mutual fund for 15 years (I actually ran it through a calculator!). I watch Extreme Couponing and then feel guilty when I spend $150 at the grocery store. It can get crazy.
Just get help figuring out your plan, and then enjoy whatever money you have left. And however you want to. We travel a bit, but we also indulge in material things sometimes. It doesn’t have to be travel (even though it’s the politically correct indulgence on financial blogs). Your plan, and your indulgences, should reflect who you are and what makes you happy.
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This sounds like one of those ask Walter Updegrave posts.
He always says: Run your money through the calculators. http://money.cnn.com/2009/06/15/pf/expert/retirement_savings.moneymag/index.htm If you need help, find a financial planner, but be careful: http://money.cnn.com/2009/05/04/pf/expert/financial_advisers.moneymag/index.htm
What if you find you don’t have enough? Will you be able to catch up? http://money.cnn.com/2010/08/10/pf/expert/retirement_catch_up.moneymag/index.htm
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Travel is no different than any other luxury. First step is to see that you’re on track for the future so you’re not eating catfood or ending up in a poor quality nursing home on Medicaid. If you are on track, then it’s fine to spend money now on whatever you want. If you’re not on track, then travel may not be the only thing you need to cut back on.
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I’d suggest getting a quote for a single premium immediate lifetime annuity (one with inflation adjustments) that pays enough to satisfy your basic expenses. Because lifetime annuities allow for higher spending rates than typical stock/bond portfolios, that’s the number that you at least have to hit in order to retire.
Here’s one good place to get such a quote: https://personal.vanguard.com/us/whatweoffer/annuities/income
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I agree that they should likely talk to a financial planner if they are in their 60s and still have no idea how much they might need for retirement.
In addition to retirement calculators there are also life expectancy calculators online that can account for a surprisingly large number of factors. This would be a good check on their expectations – what happens if they travel now but live until 90?
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Sorry No Debt DBA but it seems to me that you are slightly missing the point.
I think that if they travel now and live till 90 they will have wonderful memories to charish for longer – and I hope to share.
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Financially, we are able to travel but family issues have made any long trips impossible. We do plan to go to Costa Rica next year for a week. As someone who is retired(I retired after 35 years at 56, my husband retired at 67-mortgage paid, college paid, no debts), I would say that the writer needs to have someone go over her/his retirement/life goals with her. She could use on-line programs but I never felt totally right until I met with an independent advisor team. They covered all areas(like LTC, having all paperwork in order-maybe not here but amazing how many people I talk to that do not have their paperwork in order, short term and long term goals/wants). If she doesn’t know how much is “enough”, she will never feel comfortable traveling.
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http://www.youtube.com/watch?v=-5om6gbDwA8
http://abcnews.go.com/GMA/HealthyLiving/ernestine-shepherd-find-grandma-flab-fab/story?id=11149879
http://www.amazon.com/Growing-Old-Not-Sissies-Portraits/dp/0876544782
Also, I did the traveling thing since I was 18, and I think it’s overrated– eventually you realize that it’s better to live well every day than to live hoping for an escape from the everyday.
Good luck.
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I know there are some people who get upset that travel seems to be put on such a high pedestal here, but I would submit:
a) Travel provides context. It makes it easier to “live well every day” by having a better understanding of the world around you.
b) Travel provides shock therapy by getting you out of the routine. Again, re-living those memories adds to how I “live well every day.”
I love my life at home and when I travel because the various experiences enhance one another. They don’t compete.
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Yes, you’re right on all counts, and I like to travel too, it’s just that it’s not the holy grail some people make it to be.
And while travel vs. everyday life don’t compete for you, it seems to be the case for the original poster… Then again I don’t think it’s so hard to travel if you’re willing to take short trips during your regular vacation time, camp or stay at hostels instead of a hotel, couchsurf, etc.
I get the same feeling of breaking out of the routine when going out of town even for a day– can be a 3-day roadtrip, doesn’t need to be 6 months in Europe. There are also places where life is lots cheaper than in the US so you can actually save money by going there.
E.g.: http://www.nomadicmatt.com/travel-blogs/cheap-places-to-travel-on-the-us-dollar/
etc.
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Ah, Budapest. I want to visit since hearing Jethro Tull’s song by that name. I realize it is not the some country that the group sang about but one day I will travel. I am of the sandwich generation. I retired at 50 and am now watching my father through hospice. When my parents and dog die I will be free to travel.
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Jd, you should have asked for more numbers. It’s impossible to give any advice on the provided info (although suggesting a financial advisor is a good idea).
Sheila seems to frame the issue as a black & white scenario where they save for the retirement and don’t travel OR they travel and don’t save for retirement.
Is there not some sort of inbetween?
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Get priorities straight. Don’t replace car every 3 years, but in 8-10 years. Travel instead. 5% of population gets very sick and ends up in nursing homes. Some in their 50s some in their 90s.
You will have a good sense on how healthy you are as an indication on how long you can last. If your family members die at young age, then find out why they died and take care of the genetic risk factors you may also have.
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I was very moved by a story I read about a couple asking similar questions to Sheila’s. They were trying to decide if they should take a sabbatical in their 50s to sail/cruise for a year or two or wait until they retired at 65 years old.
They took the leap and went sailing before returning to work toward retirement. Shortly before the man’s 65th birthday, he died of a heart attack. Fortunately, they took the trip of their life together first.
It’s something I often think about. I can’t see the point in postponing life.
If you’re really worried, J.D.’s suggestion that you hire a financial planner may help settle your concerns.
And I can’t resist adding that it breaks my heart that I live in a country where people are so frightened of being destitute in their old age if they don’t maximize their earnings to plan for every contingency. I think the American trait of self-reliance can go a little too far.
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Why can’t she get LTC Insurance?
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In her letter she included:
“It’s all compounded by the fact that I’ve got a disability…”
I presume that’s why LTC is not available.
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I’m not sure this needs to be an either/or type of situation. Don’t you get vacation time? Couldn’t you use that to travel to some of the places you’d like to see until you reach your desired retirement age?
That said, if it IS an either/or situation, travel. You only live once, and it’s too short to spend your time not doing what you want with your life.
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I think first they need to run the numbers to see how much they need for retirement then go from there. My husband and I, 29 and 28, both contribute 6% at work to 401K, I have a 403. That is the highest amount our employeers will match. After our expenses each month we have $1500 extra. We are planning on doing max contributions to IRAs starting next year. We are currently renovating our home, saving up the $1500 for a few months and then having a big project done, paying in cash (ok we do use checks) is so nice!!
Having said that travel is a priority to us!! We will use any extra windfalls and such to fund a travel account. Last year we went to Italy, Germany (for Oktoberfest in Munich, Hawaii, and ended the year in NEW City for New Years. I have been a hospice nurse for over 4 years and have met too many people who wished they had traveled. People who worked their whole lives and past before they where able to enjoy the fruits of their labor. I have too many places I wish to go and things I want to experience to put off travel till I retire! But it is a fine balance between saving and travel.
JD – I am super interested in your solo travels! My husband enjoys traveling 2-3 times a year, with vacation time from work. I receive 2-3 weeks more of vacation than he does. Also we each have saving for our own hobbies, he is a comic book collector, but my money is marked for personal travel. I try to travel with friends or family 1-2 times a year, without my husband. But I have run out of people who wish to travel to the same places I do! I have looking into solo travel a little, but do enjoy travel with someone I know…
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Lindsay, you seem like the kind of responsible person I like to travel with — you save for travel, don’t have to spend every second of your life with your spouse, and you read this blog! I am female, 34, married w/kids, looking for a female travel buddy to take a small group tour to India for 8-10 days sometime Jan. – Mar. 2012. (I’ve done Africa with hubby self-drive, but India seems like the kind of place where I want a tour guide!) I found a company recommended by Frommer’s that has great prices if booking b/f June 24, so I am in a desperate search for a travel buddy who is flexible, responsible, and fun. Interested? Post back here.
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Two main things strike me from this story:
1) Sheila seems to assume traveling will be expensive. There are ways to travel for less, just look around on the web – a good place to start might be JD’s friend Chris Guillebeau.
2) They are 60 and haven’t figured out their “number” (the amount of assets they’ll need to comfortably retire). What are they waiting for? If they can’t or won’t do it themselves, they need to a financial planner to guide them. Do it now, so if there are any surprises you can make changes in the next 7 years until hubby retires.
To answer the question: if I was them I would travel and find ways to do it cheaper or cut costs in other areas. It seems like a priority to them so I wouldn’t rule anything out – move to a cheaper home, sell a car (shouldn’t need more than 1 if they are both retired), etc. Spend on what you love is what GRS preaches – if they truly love to travel they will figure out a way.
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My parents are in their late 70′s and are surrounded by people who saved and saved to travel “someday” only to find that when “someday” finally got here, they or their partner were unable to enjoy travel due to physical limitations that didn’t exist when they were younger (or in some cases one spouse was widowed, and no longer had a travel partner) My parents vowed to travel as many places as they could while they were still healthy enough to get around, and they’ve kept that vow, traveling quite regularly over the past ten years. I find it very inspiring that they made sure that they would be able to do what was important to them.
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I’m also not seeing the mutually exclusive part here between travel and saving for a secure retirement?
Can’t they just budget so that they are saving for a retirement that assumes they will live a few years past life expectancy so, maybe 85 y.o. each AND reduce other expenses such that they are able to take a 2 week trip each year until they retire?
We don’t get any financial information here in terms of numbers for income/expense or savings so it’s hard for any of us to be helpful other than say “run the numbers” and “travel now since you may not be able to tomorrow” (sort of a failing of this ask the reader to me).
I love that you put in that part about old people wishing they travelled more. My grandparents (both early 80s) are separate in this, my grandfather who still works wants to travel as much as possible but my grandmother hates to travel, so he goes away with my dad and uncles and she stays home now.
Bear in mind, they have seen the entire world several times over in their lives so not typical.
For myself at age 34, I try to go away on one big trip a year (Cape Town this year) for 2 weeks and take a few long weekends in North America for my other vacations (Cape Cod, Bermuda, Grand Cayman, San Diego, Austin being this years destinations). At the same time, I save 20.5% of my gross income for retirement in a 401k/pension and $5000 a year into my Roth/TFSA.
I never see travel and saving as mutually exclusive, they are both important to me. I cut back elsewhere to make it happen.
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Just a comment, unrelated to travel, I had reading over her letter is that the husband wants to work until 67, when health care costs will be cut in half. A lot of things can happen in the next 7 years to impact that benefit, including layoffs, sale of company to a larger one that wipes out some benefits to be “market competitive” (that’s what my company says whenever they take away a benefit from us), cost of insurance outpacing increase in income in 7 years that it becomes a moot point, and so on. Just be careful about relying on this forever.
On travel, I say do it now, and budget as much as you can out of current income. I know I over-withhold taxes at my job, and I use some of our income tax return to go towards vacation or home remodeling. Also don’t rule out that there may be some really awesome things within a 4 hour drive of your home that you can do in a long weekend while not breaking the bank.
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I love the fact that you mentioned over-withholding as a personal finance strategy. We over-withhold as well and will continue to do so for the foreseeable future. This year alone we settled a $25K debt for $6500; we had that lump sum available because of our large tax return. So many PF blogs parrot the same information over and over, and that’s understandable because some foundational truths are timeless. However, I truly think it depends what stage of personal finance you’re in. Not every strategy works for everyone often there are a number of ways to gain momentum on the path to financial independence.
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Agreed. Maybe that advice made some sense when online savings accounts were paying 5.5%, but now, what am I missing out on, $15 on $3000? I’m willing to give that up for insurance that I’m not under-withholding.
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J.D. just a note–a fee BASED planner is not the same thing as a fee ONLY planner, and your readers really should consider fee ONLY. (Full disclosure, I am one). The post you link to describes it all very well, but a fee BASED planner can be a regular ole’ broker that offers you a wrap-account where you are definitely paying commissions whether you know it or not. Nobody works for free, including fee ONLY planners, but at least you know what you’re paying for.
Quick and dirty estimator: multiply your current salary by 20 (rockbottom) or 25 (better). Do you have that much saved? Okay, that is a starting point for whether or not you have “enough” to retire. After that, it gets way more complex depending on your own spending habits, health, desire to leave something behind, long term care, etc.–all the stuff a planner would look at.
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Your rockbottom number comes out to 50% more than my lifetime earnings. How is that supposed to work? I am 61 BTW.
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The 20x figure is representative of what you need in order to have a fairly safe withdrawal rate of 4% (a ballpark figure that planners use in estimating what size portfolio will last you in retirement for, say 25-30 years). So, say you’ve been living on $100,000 per year. You’d need $2,500,000 in an investment portfolio in order to safely withdraw that amount. That could be a lower figure if you reduce it for social security and/or a pension.
Yes, I know it’s a horrendous figure and most of us don’t have it. People used to depend on the equity in their homes to make up the difference, but that doesn’t work anymore either. If you start saving a lot, early, you have the chance of investment appreciation. But it is scary. Pensions used to make up the difference, but how many people have one anymore?
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Danielle, I like the quick & dirty approach to calculating a number, since I’m still 20+ years away from retirement.
However I can stop my retirement savings at that point, so I subtracted my annual 401(k) contribution from my salary, and did 25x the result. That seems doable, I think.
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@Danielle – Your numbers are ridiculous.
Using the 25 factor implies that you are using the 4% rule which is correct. But you are basing it on current salary? Nobody, but the lowest income levels need their current salary in retirement.
Ignoring things like pension and SS isn’t smart either.
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If people HAVE pensions they should not be ignored! In fact, I’d do a happy dance if I had one. And yes, some people can get by with much less in retirement, especially if they can downsize their housing or have paid it off, or they were big savers and therefore don’t need to save that percentage anymore. But as I said, it was just a quick estimator.
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I agree with Mike… I live off of about 30% of my gross income. Housing is more than 50% of my expenses. If I had a paid-off house, I wouldn’t even need 30% of my gross income to live off of in retirement.
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@ Mike & Leigh,
She did say it was “quick and dirty” – if it doesn’t apply to your situation, then great! But I’m 27 right now and I have time to aim for that. Besides, what if you wanted to retire “early”? Then you would need more…or what if you can’t get SS (my age and younger) or what if you don’t have a pension or what if you need health insurance (chances are, that will also be gone by the time I retire) or what if…. there are tons of other things, so having that much would be great and if you need less, even better!
I agree that without the numbers, we can’t tell her much – we don’t know occupation, living location, etc that could help so for the reader question, I would say that you have to do a budget and figure out for yourself what you have and what you need – the difference can go to travel. At 60, you will still get SS so that is an advantage.
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I don’t see why this has to be like an either-or situation. Travel doesn’t have to be a full-time thing. Make a list of all of the places you want to see and then prioritize them. You probably don’t have to wipe out your savings to do some traveling. I think you should plan a trip right now and go (before one of you needs a knee replacement or something). Enjoy your health and your time together. It sounds like you have your finances in order.
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Bob,
So sad. Why can’t we live almost everyone I know is either in deep debt or have a hefty retirement account. No matter how hard you try you can’t mitigate everything in life. In the end you take a shot and live or die with it. I’m def. On the conservative side of things and I work hard to force myself to spend more. You get one life, so please live while you can.
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My husband and I travel every summer and a few times throughout the year by putting money aside each month. I’d suggest starting to do the same and travel now. You won’t have to eat into your long-term savings if you can decrease your current expenses and save the difference. It’s about prioritization – my husband and I skip daily habits like smoking, starbucks, soda, drinking, etc. so that we can spend $3000-$4000 a year on travel and save for the $5000-$10,000 trips every 5-10 years. Is there something you two can give up pretty easily in order to live your dreams? Good luck!
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Agreed on this! Put a little away every month, and when that vacation STEAL comes along, you’ll have the money to spend on it. We’ve done a two week cruise for $595 to the Caribbean, and a two week driving vacation of Panama for less than $1000…all because we had the cash when the deal came up. Plus you feel wonderfully smug when you’re enjoying yourself, and knowing you did it for way less.
Life’s too short. This is one case when I don’t feel that saving for retirement is the be-all and end-all. You have to keep things balanced. Who knows…you could step out and get hit by a car tomorrow, whether you’re 18 or 80.
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They should keep working and take vacations every year. We took many international trips in our 20s and kept working and saving. You don’t have to spend extravagant money to have a good time.
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Go. Go, go, go.
I’ve seen too many friends and family not be able to enjoy the time late in life due to disability or illness or early death.
It doesn’t have to be an all-or-nothing answer, either. If you even take just one or two of the trips you have dreamed of, you will have memories that last for years.
I went to England with my parents a few years ago, and we have savored every moment of those two weeks. It wasn’t all that expensive. And now, both of my folks are too sick to try to do that. WE ARE SO GLAD WE TOOK THAT TRIP.
It was just one trip, just one dream, just two weeks. But it was SO worth while.
DO IT. Try one trip. It won’t make or break your retirement savings. And you will learn how you feel about traveling, and you will see how many memories it makes.
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I agree. One trip will not make or break your retirement (unless it’s a crazy expensive trip). Pick out the one place you both like the best (I recommend one place over a whirlwind tour because you spend more time seeing things and less time traveling).
Then spend a few months planning it out–planning it is half the fun. Pick out a low-cost hotel or hostel–you’ll spend most of your time outside the hotel. Make a huge list of places to see and prioritize them so you that you each get to see your 2 or 3 favorites no matter what, but if some things don’t work out, you have other ideas already ready.
Just a week or two should be affordable and long enough for plenty of fun.
Don’t spend a lot on food. If you’re in a foreign country, grocery stores and street food are exotic, fun, and delicious. If you’re in the US, bring some of your own food. Remember, eating big meals at fancy restaurants takes a lot of time–time you could spend doing something fun.
Maybe splurge on one or two things, but your first time in a place, there will be plenty of cheap or free things to do that are fabulously interesting.
After you get back from that trip, you’ll be in a better position to decide what to do next. I like to take one trip each year, usually in the US but sometimes abroad. My favorite is when friends move somewhere and invite me to visit. Very affordable, even if you end up cooking for them in return, and fun, too. Plus, they’ve learned some things the easy way about a place. Certainly you should be able to afford a frugal trip once every five years unless you are on quite a tight budget.
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Great advice. To add to this, I’d suggest prioritizing the more physically “difficult” travel you want to do while you’re younger and healthier. That can include both the obvious things – like the length of the plane ride or # of connections – and the non-obvious things, such as availability of low-sodium/diabetic foods, elevators, and larger rooms and showers, and multi-lingual tour guides.
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Retirement calculators are completely ridiculous. They’re not realistic in the slightest. They all say you *NEED* at least two or three million dollars to retire.
How many people do you know that have retired? How many of them did it with $3 million in the bank? How on earth are these other people managing since obviously they *NEEDED* $3 million to retire.
It’s crap. As far as I can tell, 99% of “retirement savings advice” is camouflaged shilling for mutual funds. Even people who don’t make any money off it do the same thing, because the guy who sold them their funds did such a great job convincing them.
On the other side of the fence:
“Never put off till tomorrow what you can do today.”
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Thanks Tyler, that’s exactly what I wanted to say. I don’t know ANYONE personally who got anywhere near the amount suggested in all the financial advice I have read.
My husband and I were modest earners and we saved as much as we could. After one year of retirement we haven’t yet touched a penny of savings, just living on SS and pensions. And we travel extensively. Like everyone who loves travel, we pinch pennies everyplace else.
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“After one year of retirement we haven’t yet touched a penny of savings, just living on SS and pensions”
That’s the difference, man. Most of my friends are trying to get that $2m in the bank, because they will not have pensions and don’t trust in SS. This ain’t your father’s (or even your) retirement that we younger people are looking at.
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2 million dollars today is something very different than 2 million dollars 40 years from now. Add to that the fact that people retiring now have defined benefit pensions and very few of us will have that. Social Security will not be as generous going forward. Medicare is going to bankrupt our country. Comparing what people need now to what we will need in the future is a completely false comparison.
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Most of the people I know who’ve retired have had pensions that included health care, which makes the retirement calculators moot. Or else they were farmers who never really retired. The rest are all still working, regardless of age.
This whole “make everyone save up for their own old age” thing is a pretty radical experiment and we haven’t seen the results yet.
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I keep thinking about the parents of one my friends. For thirty years, they waited to travel until after the father retired. Six months after he retired, the mother was diagnosed with cancer. She died soon after- and they had gone nowhere and done nothing. So tragic.
Go. Travel. A few thousand dollars is not going to make or break your retirement plans in the long run.
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True. But by a few I would say $3,000. That amount with a modest 5% compound would be close to $13,000 in 30 years, a much more elaborate vacation.
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Yes but in 30 years these people are going to be 90 years old.
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Did you even read the article? Her husband is nearly 60 if they wait 30 years he’ll be 90. How many men do you know that are alive at 90 let alone able to travel on their own. That’s great advice for a someone 30 or under, but you missed the point here.
I say travel every year. Map out your bucket list, and determine what it will cost. Put aside money for your bucket list, and cross things off every year. Bottom line-you can’t take it with you. You should be saving for you future not anyone elses. You’ll always regret NOT traveling while you had the physical strength to do it. You’ll have social security, he has a pension and you are already saving. Good enough. “Carpe diem, quam minimum credula postero…”
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Why do you say that in 30 years $13,000 will be an elaborate vacation? Who knows? Someone else said that in 30 years, 2 million won’t be the same as it is now–has to work both ways.
29 years ago my college cost my 3K to go–room/board and tuition. The same one costs almost 18k now.
Hmm.
And Tyler, I think your point is exactly her quandary. A typical retirement planner/numbers pincher is going to show this lady such high number needed that there is no way that she will feel like she can travel.
My USA home is in central FL where many, many retirees go to live in the winter. They golf, go yard saling, quilt, “penny pinch” and go out to eat almost daily at Golden Corral, and seem to have a great time doing it. I don’t think that most of them have whatever ‘the experts say’ you “have to have”. I think most of them are for people who are used to living “on a really high level”–not your average person–esp. if you live NOW under budget, pay off your house, have no debts, etc.
I’d say “Travel now” while you still can.
My DH and I just took a dream trip to Brazil for our 25th because I’m not sure (even if we’re alive) by our 50th that we’d be up to going there and it’s been my dream to go to South America. We went to Iguassu Falls and it was great!!! We did stay with some friends of ours as well, which helped to keep the costs down. It was esp. great since she was one of my bridesmaids.
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I would say it is sadder that he has lost his partner in life. The person you wake up to and sleep besides and share your joy over your family. You can always still travel with a buddy. But that won’t replace the person who holds your hand on walks around the neighbourhood on a breezy spring day.
Life is sad. You can’t prevent that by spending money today. At a certain point there will always be things not done.
To say they had gone nowhere and done nothing? Live within your means. If your means don’t allow you to travel or you can’t afford the time from the job you need to live the way you want, then not travelling is a legitimate choice.
My only real goal is to watch my son grow old and happy and pressure him to give me grandchildren. To me, everything else is just gravy. And to own the truth, often I have just as much fun at my social club as I do whenever we travel.
Our vacations are just as fun no matter how much or how little we spend. So rationally, it makes no sense to spend three times as much to go somewhere when we can have just as much fun at 1/3 the price. The memories are just as good.
Everyone dreams of the good life, what’s most important is that we are happy with the one we have and can afford.
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You totally missed my point- and read A LOT into what I said. This couple could afford to travel and visit family, but they didn’t because they wanted to wait until the father retired. Also, since you mentioned it, another thing the father regrets is not spending time with his kids because he was working so hard. He planned to be more of a “family man” when he retired. He can do that now, but not with his wife.
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I think it is time to see a fee only planner and start budgeting for travel now, while they are working. As long as they continue to save enough (which the planner will help them decide) they should travel. My husband and I just went to hawaii and it was worth the cost. I also would not assume the 1/2 off health insurance will be there.
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I am in the same boat. Debilitating disease will limit my mobility in the future. 40ish with small children and married. Knowing my future limitations has changed our priorities, personal and financial.
We love to rv. Choices are to scale back retirment saving (I have a pension and 401k)or live on less. Hubby is self employed. I also intend to work until I physically can’t.
We are choosing live on less. We also are planning to sell our home and either rent smaller or pay cash for a smaller home. After much discussion, we are saving for a down payment for a larger rv with plans to purchase it in the next 6 months. I’d rather make a payment on a big ol rv than a house. Go figure.
I want to be able to travel with my family and not doing so would be my regret when older. Clothes, nice(er) furniture etc have no meaning for me. The ability to spend two weeks in yellowstone or at the Grand Canyon with my children is our financial priority.
So I say if you know your health is compromised, Go NOW!!
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Wow. On the one hand, I get this — nothing terrifies me more than the thought of being old and poor, really poor, like living on the street, eating cat food or from trash cans, cutting pills in half poor. And I’m not married, I have no kids, I’m an only child, so I’m it, no family safety net at all, plus I’m a loner. Age 45, my demographic comes after the boomers have scooped Medicare and SS dry, so it’s truly only what I will have managed to save.
My parents, early boomers, age 65 and 70, did it right. Saved 20% of everything they made starting from my Dad’s 1st check as a 2d lt. in the army in 1963; mom was a schoolteacher so she gets a pension. So now they’re sitting on a $2 mil set of invesments — classic millionaire next door stuff — lived below their means, invested wisely etc. And they saw their parents, “greatest generation” and depression era folks, work their butts off only to be too sick when they finally felt financially secure enough to travel. My mom’s mother, all she ever wanted to do was go on a stinking little one week caribblean cruise, just one, ever. My grandpa, her husband, always told her, “next year.” Well, the year she turned 60, she got really sick. Spent the next 10 years in a spiralling dementia. The last 5 in a nursing home, unable to speak, only able to moan over and over, not knowing who any of us were, basically in torment. Never got to go on that cruise. Same thing basically for the other set of grandparents. So the moment my parents retired, 5 years ago, they were off and traveling. In the last 5 years they’ve been on more than 10 cruises (luxury ones, Crystal, not cheap ones, including 2 Meditteranean, Baltic, Scandinavia, Amsterdam to Budapest, Alaska, LA to Australia/NZ, they’ve been to Italy several times, all over the US, Morocco, Bermuda, Russia, Paris, Germany, Ireland, even the North Pole. As I type this they are on another Crystal cruise in Alaska.
They do this remembering how their parents were never able to do this, even though they worked their whole lives. They do this as if they were being chased by Captain Hook’s ticking crockodile, which if you think about it, we all are always being chased by. You never know how much time you have. But they lived frugally for 40 years and have the money to do it now.
But I am 45 and have almost nothing saved and no safety net. I will not have the same luxury that they will. I think my life will be very different than theirs.
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Whoa!!!
” … scooped it dry”??? You couldn’t be more wrong with your timeline. Short history lesson in order.
We Boomers have been paying into SS and Medicare since our first paycheck 5 DECADES ago. We have been the ones financing the entire system.
I’ve been working and paying taxes since 1972 and haven’t seen one penny of benefits from either SS or Medicare. But when I finally do, the benefits I receive will be a pale “return” on my generation’s investment.
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Solo travel without joining a tour group isn’t for everyone. I’ve done a great deal of solo travel for work and pleasure and it can be a bit tough to motivate yourself to go and do things after a while. I’ll get to a city and take the tourist bus to get a feel for the place and by the second day I’m losing energy about going out on my own, especially if I don’t know the language. The “table for one” crap can be hard and I know I don’t do as many things as if there were someone to share it with.
Tour groups can help, but it depends if it’s made up of similar solo travelers or more random. Being the only solo traveler with families/couples isn’t much better than traveling alone. I hope my next extended trip involves a group of similarly situated solo travelers.
Perhaps more extroverted or adventurous folks can do better, but don’t underestimate how isolating solo travel can be.
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Don’t get why you think most people who travel are in their 60′s & 70′s, maybe you sign up for senior citizen tour groups or something? If you look at the backpacker circuit, most of the travelers are in their teens or early 20′s. In lots of the backpacker tourist regions you would probably be mistaken for someone’s grandfather. There are also tons of middle class people globally in their 20′s through 50′s who travel. Folks all of all ages travel – it is not an “old” thing or a “young” thing. My guess based on my experience is the senior citizen demographic is a tiny portion – by that age most folks want to settle, maybe somewhere abroad, but don’t have energy for travel, at least not in the sense of constantly jet-setting around and checking into and out of hotels.
Talking to people who didn’t travel until they were in the 60′s & 70′s and they regret not traveling earlier? What a surprise. Surely you don’t believe that is a good sample. Now why don’t you track down some people who took off a few years in their 20′s to travel and delayed their career down the road and are still toiling away in the office in their 60′s and 70′s and see what kind of answer you get?
Of course, in Thailand you will fit the demographic perfectly and will be in great company surrounded by packs of other married 42 year-old “solo travelers” who sat on an airplane for thirty hours so they can cheat on their wives with beautiful dark-skinned exotic ladies less than half their age. Hey, you’ll probably even see me there! I’m sure you’ll regret you waited until you got married to go to Thailand, but better now than later when you can no longer get it up. But be forewarned: a lot of those guys never come back home or are terribly unhappy if they ever do.
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Most people who travel in “tour groups” are older people. Independent travelers are in their 20s and 30s. We ourselves are independent travelers in our 30s.
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My father in law died 5 months after he retired. Luckily he did take vacations every year.
Definitely make it a priority to travel and like others said you can do it without spending a lot of money. I traveled for peanuts to all kinds of great places. It also helps if you have international friends/family you can stay with.
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This is exactly why my partner and I are traveling now. I’m 28, he’s 31. He has no debt, I paid off everything except for my student loans when I was 26 (student loans will be gone in two years). We’re putting off having kids and will be leaving the country in May 2012 for about 2 or 3 years. I’ll be teaching in various countries, he’ll be working from home, we plan on saving half of our income along the way, and seeing as much as possible. I lived in Japan for a year teaching English from 22-23 and it was incredible- I don’t want to take vacations, I want to experience living abroad again. People always tell me “oh, you can travel after the kids are gone!” but I don’t want to be 55+ and trying to camp and backpack around, or go on crazy hikes, or bike over Europe. Sure, I’m planning on being healthy enough at 55 to do that (I don’t think 55 is “old”) but I’d rather do it at 28. One never knows how much time one has.
I do sincerely hope the OP is able to devise a plan so that she and her husband can travel now instead of later.
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It’s a little difficult without sitting wiht you one on one to make a proper recommendation. However, here are some of my suggestions:
Don’t feel guilty on Travel expenses. You could probably find deals during certain times of the year. Check out places like Travel Zoo and sign up for their newsletters to receive travel deals in your email.
Regarding your retirement. Please make sure you meet with a fee-only financial advisor. A good website is http://www.cfp.net to begin your search. Make sure you ask them how they charge their services so you are clear with their fees. A proper financial advisor/planner will look over all your assets, liabilities, what you may be missing, what you may have too much of, etc. Also, you must evaluate your investments and retirement portfolio making sure you are not too aggressive. Since your husband is less than 10 years away from retirement, please make sure you have the proper allocation in all your investments and retirment accounts. Sitting with a finanical adivsor will paint you a clearer picture. Since you have other sources of income for retirement and typically in retirement you are saving less in your retirement accounts, you might be on track. I suggest asking your husband’s company an estimate of his benefits in retirement.
I hope this helps.
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Hi
Definitly take the chance and go travelling now – every 2 years I save up my leave from work and go for an extended holiday. Absolutly love it and wouldn’t change it for anything!
Also for those people able, tour groups are great – intrepidtravel.com is one I have used and have found they are fantastic!
I am also saving hard for retirement (am 29) and am paying off my mortgage at an accelerated rate. Anything is possible if you don’t spend much on material items. For instance my budget for clothes is $50/month so I save up and go shopping once or twice a year to replace essentials.
Other than that I hardly spend money as my 3 goals are travel, retirement and mortgage. Prioritise what you want and save hard!
Good luck!
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Well said! I am 28 and my husband and I save nearly 35% of our combined incomes on retirement, are paying off our mortgage in 10 years total or less, and put away another $250-$350 a month for travelling. He’s a Texas school librarian (takes home about $36,000 a year after taxes and benefits) and I am a cubicle monkey ($26,000 take home from cubicle job). It is possible to travel and save at the same time.
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I am in favor of doing both. I max out my retirement savings and travel internationally every other year and domestically every year. One of the reasons is I do not think I will want to do a lot of traveling well into my eighties!
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Travel, Travel when you are young if you have the financial means. You will regret it one day when you get old and cant get on a plane because of medical conditions etc. Travel is one of the best things in the world. Material possessions are just that material. Travel creates memories that last a lifetime and is so much more valuable that the latest iPad or newest car..
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Also travel changes- not just one’s age and health but what happens politically in the world makes a place accessible or inaccessible(or just dangerous). In 1980, I was going to do an overland trip from london to India but had to change my plans – no travel through Afghanistan or Iran. I flew to India from Rome and spent 3 1/2 months in Asia. Similar problems now in lots of parts of the world- on the other hand, you can go to China and Vietnam now(and hopefully soon, Cuba for Americans)
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Sheila and her husband have been responsible and should be able to enjoy BOTH travel AND a comfortable retirement. They may very well be in a much better position than they think.
First step, she needs to review the actual performance of all their different retirement accounts. If they are invested traditionally in ‘safe’ securities and earning barely enough to cover the maintenance fees (and as one reader pointed out, the often hidden transaction and commission fees!) than they should really consider how to increase the earning potential of those funds, especially the tax-free ROTH accounts. Debt-free real estate, first trust deeds and other alternative investments can provide safety AND income. You can do that with a self-directed IRA. The biggest worry that retirees have is ‘running out’ of funds – what if you could set up for a perpetual stream of reliable monthly income without eating away at the principal ‘nest’? That’s what you are doing with income real estate and note investments. (BTW, a colleague put 2 kids through college that way!)
Second, they need to look at maximizing their current net cash flow by playing the game according to the rules set by the IRS. Property and business ownership are the best vehicles to maximize tax deductions.
They could create more disposable cash today by looking for and purchasing property in places they like to travel and recoup many of the costs in their taxes. Like another reader mentioned, HOW you travel is the determining factor in how much it will cost. There are amazing deals available with a little research. Figure out your priorities and then plan your budget accordingly.
Bottom line is this – it’s your money and no one is going to be as interested in its success as you. Be involved in the process. Have a proactive plan. Make periodic adjustments. Make what you have work for you. Ask professionals for input and help but be sure that you aren’t limiting yourself to just one product or vehicle. A financial planner can only discuss (and get paid for!) stock market investments. Limiting earning potential to just one kind of asset is like tying one arm behind your IRA’s back and then asking it to swim the English Channel!
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This comment is for JD, and its slightly off topic. I just want to say that once you’ve been on another kind of travel that isn’t a “tour” you’ll probably never go back. The ability to go off the beaten path at will, to spend an afternoon somewhere if you like instead of following a tour guide around cannot be expressed in words.
That said, more on topic, my late husband and I used to joke (as we dragged our kids to ever castle, fair, churhc and historical site in Europe), that we were spending both their college educations and our retirement. Even in my current circumstances, I have absoltely no regrets about doing that.
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Hi, Readers of GRS:
I just read a very interesting book on this very question, “The Number,” by Lee Eisenberg. He circles the question of “how much is enough” from every imaginable angle. As a long-time editor-in-chief of Esquire, he writes very very well. He interviews every expert in the field.
His answer is: there is no number. There is a simple way of figuring out a “ball park number” if you need one, but you don’t. You need to ask yourself Big Questions: like “who am I?” and “What do I really want to do with increased leisure?”
He claims that once you know the answer to those questions you can budget your number out with a financial calculator. That’s your number. Don’t be fooled by the financial industry.
A very good book.
For those who want to get incredibly down and dirty, and especially those who hope to leave something to the kids and grandkids, or to build a charitable legacy, the best book is “Wealth,” by Stuart Lucas.
Lucas writes well, but once you get into the questions he explores, all of the creative writing courses in the world won’t help that much. This is a demanding read, period.
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I think it comes down to the ethics personal responsibility. It’s OK to spend the money to travel, so long as you don’t tax money to support you after spending all of your savings having fun. It’s not fair to enjoy yourself on the sweat and labor of other people.
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This argument is of limited utility. People should be responsible no doubt about it. However, many industries and companies sustain themselves off of the largesse of the United States. Would you call an oil company and complain to them about their subsidies?
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One factor that financial planners often see, but don’t mention, is that retirees end up spending quite heavily in their early retirement days because of pent up demand and the chance to go and do things unencumbered. Spending will (or needs to) drop off and it’s often do to health issues. Travel is probably a big chunk of that early spending.
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Start traveling. Now.
It can be tough to balance personal finance with living life to the fullest. It sounds to me like you guys are in pretty good shape. The real questions you should ask yourselves are (1) do either of us have jobs where we could work an extra year, two, or even five years if we absolutely had to if “the worst” happened and our savings were wiped out? and (2) will either of us resent the other if for whatever reason, putting off travel causes us to miss out on some “bucket list”-type destinations due to health complications?
People often overstate the consequences of living in the moment. At the end of the day, money is just a placeholder for the experiences (and to a lesser extent things) that you want to have. You don’t get anything for having a big bank account when you’re six feet under. That said, don’t go out and become a spendthrift, either; it’s all a balancing act. Sounds like you have enough to me: go for it!
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Travel doesn’t always have to be expensive. It all depends on the destination and or how you want to travel.
Have you thought about where you want to go? There are some Asian countries where you can get a really nice hotel for 30$ per night and perhaps spend between 10 to 30$ per day on food.
Europe doesn’t need to be expensive either and you don’t need to sleep in backpacker joints to save money. There are numerous alternatives like B&Bs and old converted monasteries (popular in Spain and Italy). Renting out apartments can also be a cheaper alternative.
If you are into beach vacations, there are extremely affordable all-inclusives to Mexico that really aren’t bad at all.
There are also deals out there. If you check out different websites (such as airlines and sites like expedia) on a regular basis and sign up for their newsletters, you will find great rebates. Check out the travel section of your newspaper, too.
Yes, flights can be expensive but again, as I said, there can be some deals out there. Perhaps you also have a credit card which provides airline points?
I am going to Switzerland soon for almost free thanks to one of my credit cards (I put all of my work travel expenses on it as well as my regular utility bills,and then pay in full at the end of the month…you have to be disciplined otherwise this strategy can come and bite you in the butt).
I am not all that close to retirement as I have just turned 41. I am in great shape and travel every year. I am lucky though because my employer has a generous pension but I do manage to build up my savings for travel and other things. However, I will be honest, my friends who don’t travel do have more in savings than me.
However, it is a question of choices. I would much rather travel than stay at home and spend my vacations fixing the fence…
So I say, travel.
To me, travel is everything.
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I attended the funeral a few weeks ago of a friend who I worked with for 15 years. She died at 65 after having being retired for two years. It made my husband and I both really rethink through our retirement plans. I would rather have more time and freedom to travel than have lots of money. Watching our parents …I can see by mid 80s, a big active life is over…it is a walk around the block, reading and TV mostly by that stage. So one needs to make use of the younger stronger years to do the traveling.
It sounds to me that the writer is actually not working…just her husband. If so, apart from doing couples travel when he is on vacation, would she be willing to do some travel on her own. My husband likes to travel for a week at a time, visiting relatives or going to sports events. I like long exploring backpack trips of a few months. Since I semi- retired at 55, I have been taking long budget trips on my own and love it. eg 2 month trip backpacking trip on my own in Egypt last year that cost me a total of $3000. Lots of other countries are just as cheap to travel. Check out the older travelers forum on Loneyplanet.com/thorntree
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Fetu- I would love to hear about your travels. I am really nervous about traveling alone as a middle aged woman. I used to do it as a 20 year old all the time. Chicken I guess.
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Jan…if you have done independent travel before you will have no trouble getting back into it. You will find things have been greatly changed by the internet. I admit to be really nervous the night before I travel off to a new foreign country but I have learnt to go on through it because I know that when I get there it will be fine. I also like to take time to stay in a place for little while and get the feel of the place rather than traveling to a new place every day. Check out the older travelers forum on Lonelyplanet.com/thorntree
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Some thoughts:
- Plan to travel cheaply. It’s really easy and not a big sacrifice. When I’m traveling, I spend most of the time seeing stuff anyway, so it’s a total waste to spend lots on a hotel room. Also, choose cheaper countries. In lots of SE Asia, South and Central America, Africa and other places, you can stay in perfectly adequate 1 or 2 star hotels or “pensions” or private rooms in youth hostels for $10-20 per night. I recently spent 3 months in India and usually paid $5-10 per night for rooms that were fine. I would have felt immoral paying hundreds in a country where that could feed a family for a year, and it would have been a waste of money for me. In Paris I arrived in the train station and just looked for a hotel with no reservation (I never make reservations) and found a central, perfectly fine hotel for only 30 Euros a night. Take buses and trains between countries and within internal destinations. It’s cheap and more fun/adventurous than a plane or driver. There are endless ways to stretch a dollar when traveling if you don’t act like a generic tourist. Also, once you have a few days to acclimate to living at a lower standard, it’s easy. We humans are more adaptable than we think. And when you spend money traveling, make the conscious choice that the money you are spending is worth less travel. I’ve learned that I’d rather travel more cheaply but travel more and longer.
- Cut out as many expenses as you can in your current life and put the savings in a travel account. When you spend any money, think about if you’d rather have that item (cable, a meal out, a new shirt, etc) or more money to travel.
- Plan not to retire. I think retirement is silly and sort of an old fashioned concept. Who needs to stop contributing to society through any sort of work?! Instead, at least find part-time work or consulting/contracting work or a full-time job that’s more in line with what you love and are passionate about if you don’t like your current job. I don’t plan to ever 100% retire until I literally can’t work. How boring. Instead, I take sabbaticals when and as I need them. For example, between my last two jobs, I took a break to travel overseas for 4 months. Life needs not be linear.
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Re “Plan not to retire”–Many people don’t have a choice. Almost half of Americans retire earlier than they otherwise planned to due to ill health. It’s not sensible or prudent to plan on working until age 80, though it’s obviously something we might hope for.
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My husband and I were in our forties when we decided to take 7 months to travel. We were both between jobs and we spent around £12,000 ($20,000) on everything, including the airfares. We would have spent a lot less if 2 months hadn’t been in very expensive locations (Australia & New Zealand).
It was the most fantastic experience and we had the best of both worlds, being mature enough to enjoy the cultural aspects of the trip, but healthy enough to get through the physical challenges of climbing temples, hiking up waterfalls and traveling with all your belongings on your back. Plus we lost around 30lbs each! Our experiences helped us to get good jobs with an international focus when we got back. We’ll be doing it again in around five years, but if either of us gets sick before then and we can’t travel again, we know we’ve had a very special experience and have some great memories.
I’d encourage everyone to find the time to do some extended travel before you retire; we saw people with young kids and teenagers who were sharing the experience as a family. As inhabitants of the extraordinarily wealthy western world, we are incredibly privileged to have opportunities to see places and meet people that most of the world can only dream of, and it can be done for much less money than you think.
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Thank you for all the helpful comments. I’m going to check into fee only financial advisors. We’ve seen two financial advisors (in different states) associated with our credit union. One said we were going to run out of $, the other one said we were doing great. A third opinion wouldn’t hurt and might set my mind at ease. We do have a targeted travel account (and car replacement and home improvement–gotta love SmartyPig), and practice frugality, but I do enjoy my weekly latte that I buy using a $1 off coupon on double punch day with the 10th one free.
I had to chuckle at the comments about getting enough physical activity to stay healthy. My husband rides his bike to work, which is good exercise and saves money. In January, he slipped on black ice going around a corner and fell, breaking his hip, requiring surgery. Ka-ching! Just as he started walking without assistance, he was diagnosed with breast cancer (surgery, chemo currently, radiation after chemo). We’d like a do-over on this year. The cancer is adding an extra dimension to the whole issue, and I’m leaning toward the do it now and worry about the future later, or at least worry a little less than I do now.
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Travel. It’s a sure thing. The rest of your life may be miserably frugal but we get used to things and they become alright. Regret is the WORST.
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