FINANCIAL PLANNING
Building long-term savings habits is important for those inevitable rainy days, but financial planning also begs the question, What do you want out of life? It’s no surprise that travel or adventure is often the response, particularly for those in or approaching retirement.
Have you ever dreamed of swimming with sharks off the coast of South Africa or hot-air ballooning over Cappadocia, Turkey? It’s a great idea to have the time of your life, but consider the value of careful planning for travel contingencies, healthcare costs, and travel insurance.
Golden Gap Year The first phase of retirement is often characterized as “The Honeymoon,” when people finally have time, money, and robust health to enjoy active travel. With record numbers of younger baby boomers in their mid- to late-60s, the current surge of interest in adventure travel is no surprise.
With more free time and disposable income, retirees are embarking on epic adventures they’ve only imagined, and the average adventure traveler’s age has only increased since the pandemic. This is partly because travel opportunities have become more luxurious with comfortable accommodations, healthy food, and knowledgeable guides. Hiking expeditions and long bicycle tours commonly see retirees, with some of the most challenging excursions attracting the oldest participants.
Exotic travel has become increasingly available to older explorers, even those with declining physical abilities and mobility issues thanks to a strong push to improve accessibility in airports, hotels, and resort destinations. Platforms like Cloud of Goods allow rentals of mobility equipment, such as scooters and wheelchairs, to be delivered to chosen destinations.
Is It Worth the Cost? Getting your arms around the full cost of travel is important, but remember that spending money on experiences with family and friends can be deeply fulfilling. After the expenses have been paid, the memories will last for years. And embracing a mindset of lifelong learning and adventure has physical and cognitive health benefits.
According to travel industry data, the average price of a weeklong US trip for two including accommodations, airfare, meals, and transportation is about $4,000 (before adding excursions like ziplining or white-water rafting). International travel can be significantly more expensive, such as a popular nine-day Kenya and Rwanda tour where travelers trek up the Virunga volcanoes to see mountain gorillas at a cost of over $10,500 per person (without airfare to Africa). Or, for $8,400 per person, there are trips to northern Finland to dogsled, snowshoe, and perhaps see the northern lights.
Conifer Bay Capital encourages clients to think long-term when accounting for travel, considering retirement plans and holistic financial pictures to ensure the cost of traveling is incorporated. During years when clients’ net worth is still rising – or in years where the US dollar is particularly strong against the local currency – it makes sense to take an expensive international trip. But in years when net worth is in decline, the markets are down, or there are other financial priorities for your family, we suggest a more budget-friendly domestic trip.
These days there are many more budget-friendly opportunities for adventure travel in retirement years. For example, at only $80 you can buy an America the Beautiful Senior Lifetime Pass for lifetime access to more than 2,000 recreation sites managed by the National Park Service and other federal agencies including Yellowstone, Yosemite, Denali, Joshua Tree, Dry Tortugas, Volcanoes National Park, and Glacier National Park.
There are countless cost-cutting measures available to make bucket-list journeys more affordable starting with senior discounts (AARP), early bird discounts, credit card or airline loyalty programs, and other travel promotions. Prices are highest for hotels, airlines, and attractions in summer months and on weekends, so retirees with flexible schedules can save money and avoid crowds by traveling in the offseason. The same flexibility can pay off when it comes to dates and destinations. Some retirees also may want to maximize their travel budgets by limiting trips to only the most desired experiences.
The Necessity of Travel Insurance No amount of research and planning is an alternative to expecting the unexpected. By definition, adventures can be unpredictable. Mountaineers, for example, must consider altitude sickness and other illnesses as well as the potential for accidents, helicopter evacuations, and care for bags/personal belongings. Consider travel insurance for all international destinations, activity-related trips, and excursions whose success significantly depends on avoiding potential medical emergencies and other major problems.
The cost of travel insurance varies considerably, with the average for senior travel insurance at over $400 per trip, increasing to over $600 for those with “cancel for any reason” (CFAR) coverage. Plans for seniors are usually more expensive because companies assume an increased risk of health incidents and costly medical expenses. When making estimates, a retired traveler should expect insurance to cost 10%-20% of the reimbursable amount of the trip.
Travel insurance also provides secondary coverage for gaps in the costs and services of a primary medical plan, which for retirees is typically Medicare. Medicare generally doesn’t cover healthcare costs outside of the United States and its territories. Certain Medicare Advantage (MA) plans provide state-to-state coverage and a national pharmacy network, but may limit the amount of time you can spend outside your service area and still be covered.
Choosing the right travel insurance policy depends on your needs and budget. The best ones bundle several types of coverage to provide protection before and during your trip, including cancellation, delay, interruption, emergency medical, emergency medical evacuation and repatriation, preexisting condition coverage, baggage loss, and delay coverages.
Financial Planning Can Help Conifer Bay Capital works with clients and their families, wherever they may roam, to provide ongoing strategies and support for retirement planning and beyond. Updating your financial plan is an opportunity to be intentional in the way you save and spend to support your dreams.
Many retirees plan multiple trips each year, including less expensive trips to visit adult children or grandchildren, plus one or two more ambitious trips. Reviewing the total costs from prior trips can be illuminating when budgeting for future travel, as can understanding total yearly travel costs in the context of income and net worth to help balance these goals with other aspirations.
The world is a book, and those who do not travel read only one page.
— Saint Augustine