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For many, retirement is the perfect time to explore the world. Over the next 2 weeks, we want to discuss what is one of the better ways of getting the balance right between travel goals and everyday living expenses.

This year, the theme for World Financial Planning Day was ‘Plan well to live well.’ But just what does living well mean to different people? For people in retirement, it can often involve having the freedom and finances to explore, far and wide. For their in-depth report on retirement planning, Australian Unity surveyed 1,000 Australians approaching, or already in, retirement about what they’re planning for. They found that the majority of pre-retirees want financial security and enough money to enjoy a few treats. And the most common treat they have in mind is travel. Whether it’s visiting far flung destinations around the world, going around Australia in a campervan, or regular trips to see family, pretty much everyone has a travel agenda for retirement.

Regardless of age or life stage, everyone wants to travel. When you have kids at home, it’s family holidays. When you’re retired you don’t have time constraints and can get away for longer. But whether a client is retired or not, it always comes down to what you can afford to spend on travel without taking away from your budget for savings and day-to-day expenses.

Looking at all the numbers

Striking a balance between wants and needs is essential for every client’s financial plan. One of the most valuable services we provide is helping people balance their lifestyle aspirations and financial security. By running the numbers for their overall budget, we provide them with peace of mind, knowing they can take that trip they’re planning without compromising their financial security.

For clients approaching or starting retirement, we offer comprehensive financial modelling, based on life expectancy and even in some cases up to 100 years old. We factor in conservative returns and look at when the Age Pension will kick in as their asset levels reduce over time. This gives us a pretty clear picture of what their budget is across the board – for travel money and the day-to-day stuff.  So if you can afford to be spending $10,000 a year that might be enough for one big international trip and a couple of shorter breaks in Australia. Or maybe you put that towards a much longer spell on the road in a campervan.

Of course, circumstances can change throughout retirement, and you may end up traveling less or staying closer to home as you grow older. Depending on your lifetime finances, allocating that $10,000 to travel now might mean spending less down the track. That’s something you can allow for if you have the complete year-by-year financial picture modelling can give you. Let’s say you plan to stop the overseas trips after age 75, then your annual travel budget might drop back to $5,000. But by this stage you might also need more to spend on healthcare. So, it’s a balancing act between your current and future needs as well as travel and essential costs.

Next week we will continue this discussion looking at your income options. As always, feel free to reach out to us if you require any assistance.