Travel Retirement Planning
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Originally Posted On: https://www.empower.com/the-currency/life/travel-retirement-planning
Destination retirement: Traveling to pick your paradise
Want to retire on the beach? Your next vacation might just be a window into where you spend your golden years. Empower research found that more than 90% of Americans are planning domestic travel this year, including an average of two trips, with the summer months being the most popular.
The amount of money spent on travel is also on the upswing: According to Empower Personal DashboardTM data from April 2024, 8.4% of people’s monthly expenses went toward travel, a 2% year-over-year increase.
Living in the moment now can also pay off for future considerations: Here’s how your 2024 travels can help you envision your retirement.
Drawing inspiration from travel itineraries
When it comes to getaways, New York City, Las Vegas, and Honolulu are among the top destinations for travelers staying stateside this year. Many U.S. metro areas also happen to offer perks for later in life. Taking into account cost of living and average yearly sunshine (among other retirement-friendly factors), Las Vegas ranks as one of the most affordable U.S. cities for retirees. Hawaii may also provide a tax advantage down the line: Pension income is exempt from state tax – though income from 401(k)s and IRAs isn’t. The islands also have among the lowest U.S. state sales taxes, at 3%.
The top priorities Americans consider for traveling in 2024 – relaxation (57%), family time (51%), adventure (47%), spending time enjoying nature/wildlife (36%), and culinary experiences (30%) – also track closely to important factors when choosing where to retire, such as weather, outdoor activities, and cultural opportunities.
Travel budget, meet retirement income
When arriving at a destination, Americans are willing to splurge on dining (57%), experiences (47%) and live entertainment (35%) when they’re on a trip.
As you’re taking in the scene, take a breather and consider how much you’re spending in each city. Even though your habits in retirement may shift from your current lifestyle priorities, you can get a feel for how expensive the area is to your wallet. How does going out for a nice dinner here compare to back home, or other cities you’ve visited? And how are these leisure expenses adding up?
Getting a better sense of how a city is affecting your travel budget can help inform how much retirement income you’d need should you choose to settle down there.
While your mind may be in vacation mode, it could help to let your mind wander around these aspects during a trip:
- Quality of life
- Weather
- Housing costs
- Cost of living
- Taxes
- Healthcare costs
You may not get a full view of all these retirement-lifestyle elements during your time there, and that’s where a post-trip check-in comes in.
Once back from your travels, memories may play out in your camera roll, but swiping through credit card statements and your checking account can help complete the picture of your experience in each city and how it could fit into your future. Online searches can estimate the other cost categories you didn’t spend on directly during your time (like general healthcare expenses in the area and the topic of taxes).
Planning ahead
Retirement isn’t a vacation, but your upcoming travels could give a sneak peek into this upcoming slice of life.
Half of Americans think they’re running out of time to save for retirement, even though 44% say they started putting money away early enough, according to Empower’s Time is Money study.
Crunching some numbers and getting a feel now for potential retirement locales also gives you a chance to see how you’re tracking toward saving for retirement. A financial professional can also help with your roadmap toward your forever home.
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