Economic Update | Oct 03, 2025
Hosted by Andrew Toccaceli, RICP®, MRFC® and Coley Neel, CFA® | W.A. Smith Financial Group
It is the time of year when many of you are making plans for2025, and some are taking to the roads/air to snowbird for the winter. Given this information, we believe this is a great time to discuss an important component to many who are currently retired or planning on retiring in the coming months…travel. Retirement is often envisioned as a time of freedom and exploration, with travel a cornerstone of many individuals' dreams. The allure of finally having the time and flexibility to see the world is undeniable .However, the reality of retirement planning requires a delicate balance between fulfilling travel aspirations and ensuring long-term financial security. As part of holistic financial planning, it is important to incorporate these potential expenses into your budget so that you can travel all while maintaining your financial peace of mind.
Data has shown that an estimated 62% of people prioritize travel as a key goal, highlighting its importance in their vision of a fulfilling retirement. This emphasis on travel is further supported by the widespread utilization of travel rewards programs by retirees. The fact that ~62% of individuals leverage airline loyalty programs and 47% utilize hotel rewards programs demonstrates a proactive approach to minimizing travel expenses. Furthermore, the use of credit card points for travel by ~60% of retirees showcase a strategic approach to maximizing travel value while potentially earning rewards.
The adage "Embrace the mindset of traveling while you’re young enough to enjoy it. You’re never going to be this young again" carries significant weight. While financial security in retirement is paramount, prioritizing travel experiences throughout one's life offers numerous benefits.
• Enriched Life Experiences: Travel broadens horizons, fosters cultural understanding, and creates lasting memories.
• Improved Physical and Mental Well-being: Travel can reduce stress, combat depression, and improve cognitive function. Exploring new places and engaging in new experiences can keep the mind sharp and the body active.
• Enhanced Social Connections: Travel provides opportunities to meet new people, connect with different cultures, and build lasting friendships.
• Personal Growth: Stepping outside of one's comfort zone and navigating new environments can foster personal growth, increase confidence, and enhance problem-solving skills which also ties in well with the “improved physical and mental well-being” point above.
While it is important to understand the benefits that travel may have on one’s life, it is vital that the experiences are incorporated into the fabric of the underlying financial retirement planning. Below are a few key items to discuss with your advisor to help build your travel goals into the financial plan.
• Estimate Travel Costs: Create a realistic travel budget, factoring in transportation, accommodation, food, entertainment, and potential unforeseen expenses.
• Factor Travel into Retirement Income: Incorporate estimated travel costs into retirement income projections to ensure adequate financial resources.
• Consider Travel Inflation: Account for the potential increase in travel costs over time.
• Maximize Rewards: Leverage airline loyalty programs, hotel rewards programs, and credit card points to maximize travel value and minimize expenses.
• Explore Travel Hacking Strategies: Research and consider strategies for maximizing travel rewards, such as credit card churning and points pooling.
• Consider Coverage: Explore travel insurance options to protect against unexpected events such as medical emergencies, trip cancellations, and lost luggage.
• Start Early: Begin planning and saving for retirement early to allow for both comfortable living expenses and travel adventures.
• Prioritize Travel: Allocate a portion of your retirement savings specifically for travel experiences.
By carefully considering these factors and incorporating travel into a comprehensive retirement plan, individuals can strike a balance between enjoying the present while also establishing a higher probability of ensuring financial security for the future. As we have stated many times in the past and will continue to do so in the future, the goal is to provide you with financial peace of mind so that you can enjoy your life with your family and friends and take the trips that you have always dreamed about prior to retirement. As we close out 2024, we wish you the very best this holiday season and look forward to seeing you again in 2025.
