Financial Travel Tip #73 – Retirement Planning for Full-Time Travelers

by Nora on March 30, 2013

 

How do you plan for retirement as a full-time or long-term traveler? Is it responsible to make that leap of faith into a new life without taking the full picture into account?

 

I addressed this question once by outlining my own strategies for retirement planning, as shown here:

Financial Travel Tip #33 – Preparing For Old Age

 

I believe that the principles of (and necessity for) retirement planning are sound, regardless of who you are and what your lifestyle is. We need to cover off eventualities (that may hit us both prior to and within our “retirement” years); eventualities that could affect our ability to earn money to cover expenses.

You can do this in a number of ways – regardless of whether you travel:

  • Earn more than you spend, and save/invest the difference.
  • Invest in health insurance so a medical emergency doesn’t bankrupt you – now or later.
  • Consider other forms of insurance (like Critical Illness or Life Insurance) to cover off personal or family needs in times of medical crisis. (Remember with these kinds of insurance, when you realize you need it you’ll be too late; get it while you’re young and healthy for low guaranteed premiums). 

 

 

What is Retirement, Anyway?

Then again, the very definition of “retirement” is changing. Each emerging generation is generally living longer, with energy and resources to do more at “retirement age” than our parents or grandparents were generally able to.

What do retired people do, anyway?

Or rather, what will you do when you’re retired?

 

Retirement [ri-tahyuhr-muhnt]: The act of retiring or the state of being retired; removal or withdrawal from service, office, or business.

 

I keep putting “retirement” in “quotations”, because I believe it is something of an antiquated term, since so many “retired” people actually still work – but more in the realm of their passions, and for desire as opposed to necessity.

You might even refer to the new retirement as “re-engagement”.

By this new definition, I “retired” at the age of 30; or rather I “re-engaged” by pursuing my dreams of full-time travel and parlayed my expertise into a new career as a writer to financially sustain my dreams.

 

Do I still need to plan for a future when I might not be able or willing to work – regardless of whether it’s for desire or necessity?

Of course. And I have.

 

But as I also recently realized when my life changed in a second, life happens while you’re busy making plans, and even if you do everything right, sometimes an early “retirement” (by its old definition) could be thrust upon you.

 

 

What does all this mean?

After all this waffling, you might be a little confused about retirement.

Join the club. So am I.

 

What I want to challenge, is the very definition of retirement, and how we responsibly plan for the future while paying attention to the quality of our lives in the here and now.

 

Some food for thought:

Re-Writing The Definition of Retirement

 

 

 

 

{ 9 comments… read them below or add one }

1 Lisa March 30, 2013 at 5:14 pm

This has been a big stumbling block for me. I’m in late 40’s and am very close to tossing in the job for some extended travel. The goal is to do some slow travel, and save on costs by house-sitting, and maybe swapping some work for free accom, etc. I will rent my home out which will sustain my travels, but not keep me moving ahead financially in the way that I am able to do currently (esp while still maintaining some expenses back home such as medical insurance, etc that you refer to). And this is my stumbling block – I haven’t yet worked out how to earn money while travelling to allow me to keep building on savings back home to fund longer-term ‘retirement’ (in whatever form that may be). Currently I work in IT (Project Mgmt) but lack the technical skills to do web or app development, etc. Yes, I could learn, and may do so, but at this point I want to consider other options.

Part of me is trying to run with the philosophy of ‘it will all work out because it always done’ – but the other part of me (the ‘planner’) is worried I’d be making a mistake with long term implications. I know the ‘run with it’ half will win…. but it won’t stop the worry!

I enjoy your posts as they touch on many of the more realistic issues that long-term travellers should be thinking about.

Reply

2 theprofessionalhobo March 30, 2013 at 6:08 pm

Hi Lisa – Thanks so much for your thoughtful response, and I hear you loud and clear!
I regularly feel an inner struggle between the “planner” in me, and the other part that knows things will work out. But in another way I think they can be complementary traits in ensuring that things ultimately do go well.

Finding an extra bit of income along the way will help you to exceed your expenses to the point that you can save some money for retirement. And the question to ask (if you haven’t already) is how do you envision your retirement – and how much will that cost? It might be that in your travels you’ll find a new “home” with a lower cost of living, negating the need for as much money as you’d need in the States (assuming that’s where you’re from).
Then again, maybe you’ll increasingly desire the comforts of home with age, and you’ll need a more substantial cushion to fund it.

It’s up to you (as it is for each and every one of us). Your retirement vision (and earning capacity) may change over time, but it’s always good to keep doing what you can to ensure there IS one.

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3 Sheralyn March 30, 2013 at 6:04 pm

Good that you bring this up.! 🙂 I read a lot of blogs these days, written by long-term travelers, yet I’ve never seen one of them mention retirement – until you just did right now! What happens when you’re 70? 80? or 90 years old? Yes, you have money to travel now, but what about THEN?

Will government old age pension cover your expenses? Will you be eligible after living out of your home country for so long? etc.

I’m certainly not saying this means one can’t travel long term, but for sure people need to plan for the day when they may no longer be able to earn a living… just in case!! To me, it’s a mandatory piece of the long-term-travel-affordability equation. One wouldn’t want to end up as a destitute senior citizen some day, living in a terrible area of town, totally dependent on government benefits (which will likely be rather small).

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4 theprofessionalhobo March 30, 2013 at 6:22 pm

Hi Sheralyn – I think it’s a bit of a tender topic, since the mentality of many long-term/full-time travelers is one of chucking in the “standard life” and living more in the present moment…including financially. And with that attitude tends to be a flexibility and willingness to compromise – which could be necessary if something goes wrong or retirement suddenly comes along.

And I’m painting with a broad brush in suggesting that full-time/long-term travelers don’t plan; I am among the ranks of an increasingly large number of former professionals who have taken their business skills on the road. These people, I believe, also are inclined put contingencies into place and plan for their futures.

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5 Sheralyn March 30, 2013 at 7:01 pm

I’d never thought of it as a tender topic, but I suppose I should have considered that possibility. In any case, hopefully most people at least give this issue some thought so that they won’t be caught off guard in old age! And hopefully your bringing up the topic will remind people to think ahead to the future (not saying most people aren’t, but maybe there are some who are not, and they will benefit from this conversation!) 🙂

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6 Sarah April 1, 2013 at 9:19 am

Thank you for this timely topic. I think for those of us who have put down a financial foundation early, so that our retirement funds can be left alone (but not too alone!) to grow for retirement, it is easier to adjust for sabbaticals and longer term travel desires. But I speak to many folks in their 20s and early 30s who should understand that building even a small nest egg now will benefit them greatly in their golden years. They don’t always want to hear this message, but it is part of grown-up life.
Hope your healing is coming along well.

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7 theprofessionalhobo April 1, 2013 at 9:33 am

Sarah – You hit on a great point: that the best time to save (ie in your younger years) is also the time we’re least inclined to save, partly due to juggling the expenses of getting set up in life and wanting to enjoy a lifestyle as well.
I forget that I was very lucky to have saved and invested a large chunk of my income dating back to my first job at the age of 17. That nest egg is the base of my retirement savings, and I add bits to it periodically but I’m confident that the “hard work” of saving has already been done.

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8 Sam April 4, 2013 at 12:45 pm

My mother is on the cusp of retirement right now, and though her retirement will certainly be financially sustainable, she worries about what to do. She’s planning to take a three week trip to Ecuador and the Galapagos later this year, after having retired, and when she first told me, I asked why. Why just three weeks, if you can afford (both in time and money) to take two months, or six weeks? I don’t get it. I guess, having come across the slew of travel bloggers who live life on their own terms when I was in my early twenties, and now attempting to do so myself, the idea of having a career for thirty years, then retiring from it seems quite alien to me. I guess “re-engagement” must seem quite alien to my mother right now.

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9 theprofessionalhobo April 5, 2013 at 9:06 am

Sam – It sounds like you and your Mum straddle the societal generation gap…you both have different conceptions of the “life plan”.
But I must also note that in my observation, the older people get, the less adaptive to change and travel stress they are – especially if they’re not accustomed to it to begin with. This might explain your Mum’s desire for a shorter trip; anything longer than 3 weeks might be incomprehensible. But you may find that once she’s gotten her travel legs under her with this trip, she may be more willing to travel in a different way or longer-term in the future.
Either way, I suspect she’ll have a ball in Ecuador and the Galapagos!

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