Globetrotting can be an exciting adventure

But are you prepared? Learn how you can finance your travel ‘bucket list.’

11 Jan 2019


Whether you’re in your golden years, planning ahead or young and restless, it’s likely that travel goals feature high on your “bucket list.” While travel during your working years is constrained by vacation days and logistical challenges, retirement brings newfound freedom to your globetrotting fantasies—as long as you’ve socked away enough savings.

According to an AARP survey, about half of all baby boomers have a travel bucket list they’re looking to complete.1 But how can you make sure that you can achieve your bucket list goals without compromising your other retirement goals? We’ll walk through a few simple steps.

Create your travel goals

The planet is vast and diverse, and a big challenge can be narrowing down the list of destinations you’d like to visit. In 2018, 96 percent of baby boomers planned to travel within the US, while about half planned to travel overseas.2

Ask yourself: Do you want to take a cruise through the Panama Canal or meander through the streets of Rome? If you’re up for something more physically demanding, how about a tour of Mount Kilimanjaro or a hike up an Egyptian pyramid? Behavioral studies have shown that you can get almost as much enjoyment from anticipating a vacation as the vacation itself!3 But be sure to keep practical considerations in mind. For example, earlier in your retirement, focus on trips that might be more physically demanding.

Ask yourself: Do you want to take a cruise through the Panama Canal or meander through the streets of Rome? … How about a tour of Mount Kilimanjaro or a hike up an Egyptian pyramid?

You should also consider whether you want to plan a single trip as a “bucket list tour,” or split it into multiple trips. A single, around-the-world tour can be more affordable than taking several individual trips, but it can be tiring to be away from home for an extended period of time and less overall enjoyment per dollar. Furthermore, it’s a challenge to pack for a wide variety of climates; you don't want to find yourself hauling swim gear on a trek through Nepal, only to take your parka to Tahiti.

Finally, you may want to look into “slow travel,” where travelers make deeper connections to the places they visit instead of scurrying from place to place. 4 A slow traveler might rent a home for a month to explore a region and get to know its local residents.

Finance your bucket list

“I’ve found that some couples will have an extensive list of travel plans that’s put together without ever really budgeting for it,” says Ainsley Carbone, Total Wealth Strategist for UBS. How you budget for travel depends on which stage of planning you’re in. When you’re in your pre-retirement years, Carbone says, “you don't necessarily need to save for retirement and travel separately, you just need to make sure all costs are accounted for.”

In 2018, baby boomers took an average of five leisure trips, spending an estimated total of $6,300 across all trips. Carbone recommends determining how much traveling you’d like to do and then calculating how much it will cost. This “bucket list budget” needs to be included in your planned retirement expenses—along with the more mundane items, such as food, healthcare, housing, etc.

When it comes to planning for a large upcoming trip, Justin Waring, Investment Strategist at UBS, says it’s important to make sure that your imminent spending needs aren’t exposed to market volatility. “Like all short-term spending needs, it’s a good idea to take that part of your retirement savings and keep it in cash and short-term bonds. This reduces the risk that you’ll need to sell a big chunk of your portfolio at the last minute—and potentially during a big market drawdown.” Waring suggests setting aside funds for the next two to five years of expenses, while savings for longer-term retirement and travel spending should continue to be invested for long-term growth.

For those who are already in retirement, Carbone stresses that “first, you need to make sure you’ve saved enough for the essential retirement expenses. From there, you can decide how much of the budget to allocate for travel.” Waring adds that retirees should consider cutting back on some discretionary items—such as eating out—ahead of a big trip, in order to stretch retirement dollars further.

Globetrotting can be an exciting adventure. With the right strategies in place, you can see the world without straining your investments or financial security. Are you ready to fulfill your travel bucket list?