7 WAYS RETIREES CAN GO GLOBE TROTTING ON A FIXED INCOME
A lot of people want to travel and retirement seems like the perfect time to do so. But just because retirees have more time on their hands doesn’t mean they’re always flush with cash.
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The good news is that there are ways to travel the world and see all those exotic places — and have those unforgettable experiences — even if you’re on a fixed income. Here are just some of the ways retirees can go globe trotting without risking their financial stability in their later years.
Balance Tax-Efficient Withdrawals With Local Price Differences
“I’ve developed strategies for retirees aiming to travel while sticking to a budget. One particularly effective approach involves structuring retirement income streams to benefit from tax efficiencies while taking advantage of geographical arbitrage,” said David Blain, chartered financial analyst (CFA) at BlueSky Wealth Advisors.
Starting with the tax strategies, Blain said that retirees find ways to optimize their withdrawal sequences from their IRAs and 401(k)s to get them the most tax benefits. Not only can this reduce their tax liability, but it can also help stretch their retirement funds so they can travel.
As for geographical arbitrage, Blain said “Retirees can strategically relocate or travel to regions where their dollar stretches further due to lower cost of living. Countries in Southeast Asia and parts of Eastern Europe, for instance, offer rich cultural experiences at a fraction of the cost faced in the U.S. or Western Europe.”
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Travel Last-Minute or During the Off-Season
Another way to make traveling more affordable is to take those trips during the off seasons. Travel when and where most other people aren’t and you’re likely to find better prices on things like airfare and accommodations. You might even find cheaper bundle deals that include events at your destination.
“Since retirees have more flexibility in their schedules, the key is to travel at unusual times or even last minute. If you live near a port, look for last-minute travel options. For example, cruise ships will often offer last-minute deals for unsold rooms. Last-minute deals are usually at a considerable discount,” said Jay Zigmont, Ph.D., certified financial planner (CFP) and founder of Childfree Wealth.
“Additionally, be sure to check any travel plans for peak and non-peak times. Pick the times that are the cheapest and avoid peak times like school vacations.”
Embrace the Nomadic Lifestyle
While taking frequent or lengthy trips might not be feasible for retirees living on a fixed income, embracing a more nomadic lifestyle could help.
Rather than going from city to city or country to country, choose a more central location and stay there for a while. This can lower expenses, and not just when it comes to airfare. Even long-term accommodations are often cheaper than short-term ones.
“I encourage retirees to explore the benefits of a nomadic lifestyle or part-time residency in multiple countries,” Blain said. “This can provide savings in terms of taxes, living expenses and healthcare costs.”
Plus, staying in one place is a great opportunity to really get to know the area and learn to live like a local.
Volunteer or Work Part-Time While Traveling
Just because you’ve retired doesn’t mean you can’t still use some of your free time to volunteer or work part-time.
“One overlooked strategy suitable for retirees on a fixed income is ‘voluntourism,'” said Jodi Blodgett, a professional travel photographer. This is essentially where you travel while volunteering with local organizations.
“[Voluntourism] not only helps cover parts of travel costs through organizations but also provides immersive experiences that are rich in culture and community interaction,” Blodgett said.
There are local volunteer programs you can get involved with that’ll often offer free meals and accommodation in return for certain skills or expertise. Or you can join an organization that handles the logistics for you, but charges a fee in exchange. Be sure to weigh the costs and the gains before going with the latter.
Take Advantage of Better Exchange Rates
“Spending extended periods in countries with favorable exchange rates can dramatically decrease overall living expenses,” Blain said.
Depending on where you’re from and your local currency, you could choose destinations where your money goes a lot further. You’ll still have the same amount you did before, but you’ll be able to experience much more with it at your destination.
Keep an eye on different countries’ exchange rates and wait until you find one that suits your needs financially. For the best rates, exchange currencies at a local credit union or bank.
Take Advantage of Senior Discounts
Many companies offer senior discounts to those who are of a certain age — usually 55 or older. For example, United Airlines offers discounts to those ages 65 and up on some flights. Many museums, restaurants and other local venues also provide cheaper rates to seniors.
Retirees can also combine the already built-in senior discounts with certain membership or rewards programs. For instance, the AARP allows members to save up to 10% on hotels and resorts or 30% on car rentals. There are always specific rules and limitations to be aware of, but this can also help those living on a fixed income.
Look Into Passive Income Streams
When it comes to passive income, the sky’s the limit.
One option for those who own their own home and want to spend a significant amount of time overseas is to rent out their property on sites like Airbnb or Vrbo.
In 2021, Airbnb hosts earned an average of $13,800. While the company hasn’t released more recent earnings, renting out a home continues to be a profitable way for many to earn supplemental income.
Of course, every person’s story is different. Properties located in more desirable or touristy areas are likely to bring in more money. But even a few extra thousand dollars a year could offset the cost of traveling abroad.
Renting out a property on Airbnb isn’t the only way to earn supplemental income while traveling. It’s all about leveraging existing skills and experiences in a lucrative way — whether that’s to get into affiliate marketing or start an online course that generates monthly income.
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This article originally appeared on GOBankingRates.com: 7 Ways Retirees Can Go Globe Trotting on a Fixed Income
2024-05-07T14:19:20Z dg43tfdfdgfd