Yes, you can travel and save for retirement at the same time
— here’s how
A good vacation is about so much more than taking a break from work. Travel can help us learn about new cultures, see new things and broaden our horizons. People with wanderlust know that when the urge to travel hits, it can be hard to ignore. Despite all the positive things associated with travel, doing so without a financial plan is unwise, especially when other things — like retirement — should be a priority.
Of course, it’s important to keep your health and safety upmost in mind when traveling during this time of COVID-19. You should check the Center for Disease Control’s latest recommendations and protocols for both domestic and international travel.
Luckily, with a little planning, you can still travel the world while saving for your retirement needs. Here are some ways to do just that.
Before you decide to put money toward travel, you should make sure you’re meeting (nay, exceeding!) all of your retirement goals. To start, make sure that you are putting at least enough into your company’s retirement plan to meet any monetary match that they offer. After that, if it’s possible to contribute even more, consider diversifying into additional tax-advantaged retirement accounts, like an IRA, to increase your savings.
Most experts recommend saving at least 10-15% of your overall income in retirement accounts. A financial professional can help you determine how much you ultimately should be saving each month for retirement based on your income and overall goals.
Once you’ve figured out how much you need to be putting away for retirement, you can move on to saving for travel. The first step toward being able to pay for your trips — rather than putting them on credit cards and worrying about how to pay for them later — is to create a new budget that makes room for your updated retirement goals and allows you to save money each month specifically for travel. If you find that money is tight during this step, consider cutting back in other areas of your budget that you don’t use or need and funnel that money toward travel, instead.
Now that your monthly budget includes saving for travel, it’s time to actually funnel that money away. A great way to keep this money separate is by opening a new, high-interest savings account and setting up automatic payments to go from each paycheck directly into it. If you’re already meeting your retirement goals and you don’t have high-interest debt, you might also consider putting any bulk payments — like a raise or bonus — into it as well, to reach your goal faster.
Once you’re actively saving, you can make your money go further by researching creative ways to travel more cheaply. For example, traveling during the off-season is usually cheaper, or you could consider swapping houses with friends and acquaintances in different countries to save on housing. At the very least, renting entire apartments or homes on sites like Airbnb tend to be cheaper because you can split the costs with more people and cook at home for some of your meals. Don’t forget to set flight alerts to score dips on airfare, and plan to cash in on credit card miles, as well.
If covering your overarching financial goals like retirement while simultaneously saving to travel leaves you a bit short, a side job is a great way to bring in a little extra cash. These types of jobs are often flexible — or at least seasonal — and any income that you earn can be put directly toward your travel goals.
If you love taking trips, then traveling the world is an experience you should get. Even so, it’s important to ensure that other areas of your financial life are covered before doing so. While the above steps can help you save for retirement while simultaneously covering any travel expenses, if you have other financial goals — like paying off high-interest debt — consider talking with a financial professional about how to make sure all your bases are covered.