How to Save Up for Travel in Retirement
After retirement, your salary income will stop, but your lifestyle should not be diminished. The goal of financial planning through your life is to have sufficient funds to continue and even improve your lifestyle post-retirement. Ideally, you want to be able to live some of the dreams you couldn’t afford when you were younger – and seeing the world is foremost among them.
Jan 2023
3 mins read
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Many people have a bucket list of dream destinations, and retirement finally gives them the time and the money to start traveling. With a sound financial plan, you can live life to the fullest and pursue these post-retirement passions. One way to do this is by incorporating a saving option in your personal finance plan. Here are some tips on how to save enough money to travel post-retirement:
Find out how much you need
Create a list of the places you'd like to visit in the next few years, the activities you want to pursue and the likely timeline for them. Maybe you want to take a few big luxury trips, or multiple smaller getaways. Some people want to explore everything India has to offer, while others want to go abroad. Knowing your travel wish list will give you a rough idea of how much money you will have to amass. For each trip, your estimated cost should take into account not just airfare and accommodation, but also expenses like meals and transfers. It’s important to plan out each expense to avoid a shortage of money later.
Identify multiple savings options
You may want to keep accumulating savings in the bank, but there are also other profitable ways to save. Good investment planning strategies may offer higher returns and reduce the chance of the savings being diverted to other expenses. One option is recurring deposits, but these may be bound by fixed tenure and withdrawing them prematurely can bring in penalties.
Another tool for investment planning could be mutual funds. However, the approach for mutual fund investments for luxury travel is not the same as that for long-term investments. Luxury trips fall under short-term goals, so they are not suited to the heavier risk some of these funds typically entail. Instead, debt mutual funds might be a better idea.
The benefit of investment planning through such mutual funds is that it offers you market linked returns which may be more than your savings bank account can offer. Moreover, these funds provide more flexibility as they aren’t bound by tenures. A good example of such a debt fund are Liquid Funds.. The investment period here is short and the interest income is the main income source. Moreover, their liquidity is similar to that of savings bank accounts without any lock-in period. You could use these funds tor trips within a year. You could even consider an option like ultra-short duration debt funds. However, these may have a slightly higher risk as compared to liquid funds, though they’re still among the lower riskmutual funds. They tend to lend for periods of 3-6 months.
Explore annuities
Annuities are a great way to fund luxury trips. Many annuities are backed by insurance companies and can offer you fixed income from your retirement corpus. Initially, you can fund them with a lump sum or periodic payment and receive pay-outs after the annuitisation period to fund your trips.
Plan your taxes properly
You may have a sound investment for retirement planning in place. However, if you don’t plan your taxes well, your savings may get drained as the income from your investments will be taxable. It’s important to choose the best tax-saving investment options to minimise your tax burden and boost your travel budget.
There’s nothing like travel to enrich your life. With a strong savings and investment plan, you can do justice to your travel dreams and live the post-retirement life you deserve. Consult a professional financial advisor and start packing today!
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All the Mutual Fund investors have to go through a one-time KYC (Know Your Customers) process. Investor should deal only with the Registered Mutual Funds (RMF). For more info on KYC, RMF and procedure to lodge/redress any complaints, visit https://www.pgimindia.com/mutual-funds/ieid.
MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY. Read more
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