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Planning Lots of Lavish Travel in Retirement?

Darryl Rosen • Feb 14, 2023

Do you imagine lots of lavish travel during your retirement? 

Your dreams may be dashed if you read what I read this morning.

An article called… Boomer's remorse: These are the top 5 ‘big money’ purchases you will (probably) really regret in retirement

They cite 5 areas of caution. 

Too much spent on…

  1. Regular lavish travel
  2. The dream home
  3. A luxury car, boat or RV
  4. Too much help for adult children
  5. A vacation, resort or second home

I mostly agree with the last 4 points, but I do have a thought on travel.

The author says: “Several big trips at the start of your retirement means big withdrawals that limit the growth of your investments for the next 20 or 30 years. That can mean you’ll have less to rely on when health care expenses typically rise.”

This is essentially accurate. The way retirement plans get waylaid is not too much spending early in retirement, it’s too much spending early in retirement in a down market.
 
So plan for it.

In my retirement plan, I have allocated a specific amount of money for travel from 65 to 75. Here is how I will make that a reality without short changing myself in the long run.

First, 5 years out from retirement, I will allocate enough money to cover the first 5 years of retirement in full.

With this first step, I will remove all market risk with funds I need for these years. A cardinal rule is you never use funds that are susceptible to market fluctuations. If you retired at the beginning of 2022 without a good plan, you may know what I mean.

Second, I will keep the bulk of my money in equity ETFs because over the long haul this is the category that does the best. It’s true nobody knows where the market is going in the short term, but the stats are conclusive over nearly every 10 - 20 year period. Positive returns.

Some people buy long term care which has the effect of reducing the heavy lifting a portfolio must do if a long term health situation arises. This is the cherry on top. 

So, this may seem like a riddle but having too much “early year” money at risk and not enough “later year” money at risk is what might ground your travel plans in the long run. 

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