Why it’s a financial planner and not a travel agent you should speak to if you want to see the world in retirement

Dogs pulling a sled under the Northern Lights

If you plan to travel in your retirement, you’re not alone. 2021 research from Aviva found that one of the top things people want to do when they retire is to head off and explore far-flung places they may not have been to before.

More than 40% of respondents to the Aviva survey put travel at the top of their bucket lists – and perhaps travel has become even more appealing after a couple of years where you have been forced to cancel your holiday plans.

The survey found that retirees had a range of travel plans:

  • Cruises and round-the-world trips proved popular.
  • Many people listed journeying to see specific sights, such as the Northern Lights, the Great Wall of China, and the Rocky Mountains.
  • Others want to go overseas to have specific experiences, such as whale watching or seeing the Ashes cricket series in Australia.

While travel may be top of your retirement agenda, managing your spending so you can take the trips you want is also likely to be a concern. For example, the cost of travel insurance for older people has rocketed over the last few years. Indeed, a family friend recently posted on Facebook that he and his wife had been quoted nearly £1,000 for a one-year travel policy!

Many clients we speak to are also worried about travelling early in retirement because they don’t want to deplete their pension fund too soon, and risk running out of money in later life.

So, before you head to your local travel agent, here’s why speaking to a financial planner first can help you to achieve all the retirement travel goals you have.

Managing the costs of your trips

When you retire, it’s likely your expenditure will change. Perhaps you’ve paid off your mortgage, and you no longer have the cost of commuting to consider?

However, other expenses may increase. Your utility bills may rise as you’re spending more time at home, and you may want to spend a lot more on travel.

As an example, iNews reports that older travellers could now pay more for their travel insurance than their flights.

The average price of an annual travel insurance policy increased by around 50% between August 2019 and August 2020 for both European and global cover – most likely due to insurers needing to add extra medical cover for holidaymakers after the pandemic.

Understanding what your post-retirement lifestyle will look like, and how your expenditure will change, is crucial if you want to ensure you have “enough” to reach your goals.

Create a flexible income plan that will change as your needs change

When you retire, the money you’ve diligently saved during your working life must provide an income that will help you to live your desired lifestyle.

So, before immediately booking a round-the-world cruise, it can pay to speak to a financial planner first to establish that any money you take from your fund is sustainable.

For instance, taking a significant sum from your pot at age 55 – when you could easily live for another 30 or 40 years – could leave you short of money in later life.

Indeed, research from 2019, published by Money Marketing, shows that people who don’t take advice when they come to draw their pension are three times more likely to deplete their fund than people who seek professional advice.

We meet lots of clients who hold onto cash and their savings because they are afraid of running out of money in later retirement. However, a carefully considered and flexible financial plan will allow you to spend some of your money earlier in retirement while you are still fit and healthy, while ensuring you have enough for later life when your expenses may be lower.

Of course, keeping too much of your wealth because you’re afraid of running out of money could also present problems later down the line. If the value of your estate remains above the Inheritance Tax threshold, you could end up losing a significant sum to tax.

Our job is to help you to create an income strategy that ensures you can do all the things you want to in your life without worrying about running out of money or dying with too much.

We do this using sophisticated cashflow modelling, that considers a range of factors including market volatility and high inflation, to show you in black and white what your financial future looks like in different scenarios.

There’s nothing more satisfying than showing clients in black and white that, yes, they can book their dream holiday because they aren’t at risk of leaving themselves short in the future. It’s a genuinely life-changing moment.

So, next time you’re on the way to your local Hays Travel, pop in and see us first.

Get in touch

To find out how we can help you to live the post-retirement lifestyle you want, please get in touch. Please email or call 01454 416653.

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