The best way to predict the future is to create it
Having enough money for retirement travel is the hope of many retirees. Yet, once you retire, your retirement income is finite (Or, so it may seem) Yet, for many retirees, this is the reality. Your pension, superannuation, or retirement investments determine your annual income. If you decide to retire and never work again, there is no option for overtime, promotion, bonuses etc. Your income is your income.
Retirement travel adventures is very often the first priority of many retirees – us included. Some may say they are happy to splash out on a big trip following retirement. But, retirement travel most often has to be funded from within our annual budget.
For many retirees, their retirement income is less than the income they earned when employed. Yes, many expenditure items can be greatly reduced. Therefore, upon retirement it is important to review household and personal expenditure. In all areas savings can be made!
Some retirees decide their retirement income is not enough. Let’s face it, we could all spend the annual income we earned when working, and more. Consequently, some retirees are opting to supplement their retirement savings, even in minor ways. Additional income, even small amounts, can make a big difference to one’s retirement travel options.
Perhaps Iris Aphel has it right when she says “More is more and less is bore”. I love this statement. Iris is talking about accessorising and style. We certainly do not want to live a boring day to day life saving towards that dream retirement trip. Nor do we want to be scrimping and saving to the degree we feel we are going without. Yet, Iris also speaks about things not being instant, how people have to work for what they want (even in retirement).
Travel costs money. It is acknowledged that saving the money to enable happy retirement travel adventures may take a lot more than simply adjusting one’s budget. Indeed, if you are serious about making your retirement travel dreams come true you may need to do a serious review of your current lifestyle. For instance, perhaps you need to reconsider where you live, the number of cars you have, ways of reducing any personal debt etc. Or perhaps (dare I say it) seek paid work!
This blog is merely focusing on general budgeting tips. How do you travel without eating into your retirement savings?
Make your future travel dreams come true by planning and budgeting now.
Some retirees may say it is too late to begin budgeting and saving now. But, in our view, it is never too late. Here are our tips on budgeting for retirement travel.
We are not Financial Advisers or Accountants. We are simply every day Aussies, recently retired, and keen travellers. This is simply our way we budget to ensure we can enjoy retirement travel. Seek professional financial advise if necessary.
We acknowledge there is NO one way, and this way of managing money will not suit everyone. So, for what it’s worth, here are some simple suggestions to consider.
Prepare a personal budget
First and foremost, before you think about travel, prepare a personal budget. If you have a personal budget, make sure you review it on retirement.
If you do not have a budget try using the ASFA retirement standard budgets (The Association of Superannuation Fund of Australia). Use this model as a guide:
- Review the ASFA budget guide. Eliminate any items listed that are irrelevant to you. Calculate the amount of the deleted items. You may be able to use this amount elsewhere in your budget.
- Draw up a blank retirement budget spreadsheet. List only items relevant to you, as per the ASFA guide
- Document your annual income. Then calculate your monthly income. In other words, how much do you have to spend each month.
- Review your regular expenses. Review if you can make any savings in any areas – utilities, phone, internet, insurances etc
- Calculate and list monthly expenditure for all relevant items, as per the ASFA guide.
- Balance the budget. All expenditure over 12 months should equal annual income.
Trial your retirement budget plan at home for several months. Adjust as necessary.
Set up a bank account to pay all bills
Have your retirement income deposited into a bank account to pay all bills. Out of this bank account pay ALL home, car, insurance, health care, and emergency expenses etc.
Keep personal bank accounts separate from the bill paying account. Also transfer amounts for personal spending from this account.
Calculate a personal budget
Calculate all incidental expenditure of a personal nature. Use the ASFA retirement standard as a guide. For example, hair cuts, clothing, eating out, movies etc.
Settle on an amount you will draw every week or fortnight. This money is for you to spend as you wish. If you are a couple, it is important to both agree on what is a realistic personal budget for you BOTH.
Aim to always draw the same amount, as per your budget. Withdraw this amount in cash. For us, this took some getting used to. We had become very used to swiping our plastic cards. But we have found it makes a huge difference actually seeing how much you have in your wallet, and knowing it has to last you the week.
If you don’t spend all your money one week, put it aside or bank it. You may need it the following week. Or you may want to save up over a couple of weeks for something special.
Allocate a weekly budget for groceries. Be realistic with the amount you allocate to the weekly grocery budget. Physically withdraw this amount. Set it aside in a separate wallet. Only buy groceries with this money. If you do not spend all the allocated grocery money keep it in the wallet. Some weeks you may need to buy more groceries than other weeks.
If you prefer using a card, consider opening an account for groceries. The trick is to keep within the budget. It is easier to keep track of the grocery budget if the money is separate from other funds.
Set up a holiday bank account
In the ASFA retirement guide there are domestic and overseas holiday expenses listed. We decided to simply calculate one holiday amount.
Once you have calculated the amount you can spend on travel each month, open a holiday bank account. Direct debit this monthly amount into the holiday bank account.
Then, begin retirement travel planning, based on the amount you have to spend.
If you manage to keep within your budget in other areas, than the holiday balance will gradually accumulate. If you do not keep within your budget, than it is very likely you will need to dip into your holiday account to help pay bills.
We have always had a household budget, but never a personal budget, as described above. Having a personal budget has been a big change for both of us. We decided we needed to do this, otherwise we would risk drawing into our retirement savings for general daily living expenses.
Having our retirement budget plan has made us both think about what we spend our money on. We do not waste money in the way we did prior to retirement. In fact, we are a lot clearer about our retirement priorities and how we want our lifestyle to be. We are clearer about what we want to spend money on, and where we do not want to waste our money.
At this stage of our retirement, travel and travel experiences are currently our big priority. We cannot continue to travel and enjoy wonderful travel experiences if we simply waste our money without thinking. With our retirement budget, we do not have to worry about bills or how much we can spend each week. Budgeting enables us to live within our means. Budgeting enables us to enjoy wonderful retirement travel experiences, without jeapodizing our future financial status. Most importantly, our retirement budget plan gives us peace of mind.
So, if you are wanting tips on how to budget for retirement travel, our major tip is to firstly do a personal (or couple) retirement budget plan. We believe doing so will help you to make the best decisions based on your available retirement funds. Hopefully, such planning will enable you to set aside enough money so you can enjoy wonderful travel experiences.
What about you?
What is the best budgeting advise you have ever received? What’s your tip to help save for travel when retired? Have you any budgeting suggestions ? We would love to hear your thoughts. Please join in the conversation by leaving a comment.
Happy and safe travels
From Estelle and Greg – Retirees Enjoying Travel.