How Much Should You Spend on Travel in Retirement?

A couple I'll call Chris and Ellen came to us with $3.2 million and a plan for Chris to step back from his VP of sales role at 56. They had already settled on a travel budget.

"We figure we can do about $30,000 a year," Ellen said.

I asked where that number came from. Neither of them knew. It just felt safe.

I see this constantly, and it runs in both directions. Some people never separate travel from their core lifestyle. Others pick a conservative number, never test it, and quietly give up the trips they've been planning since the kids were in grade school. Either way, there's no clear number behind the decision.

Most retirees plan travel like a fixed expense, the same amount every year for the next 30 or 40 years. Travel doesn't work that way. The trips you want at 58 are not the trips you'll want at 82.

In this article, you'll learn how to set a travel number you can defend, fund it on purpose, and book the trip without doubting it.

"How Much Should You Spend on Travel in Retirement? ($3M to $10M Portfolios)"

Your money may need to last 40 years. Your biggest travel years probably won't. Think of retirement travel in 3 phases:

• The go-go years: The Amalfi Coast, the safari, 3 weeks in Japan, the trip you've been thinking about since your kids were small. Long flights, lots of walking, and you're fine with all of it.
• The slow-go years: Fewer trips, longer stays, and better seats.
• The no-go years: Closer to home, with more family and more convenience.

This isn't a rule about age. I know 78 year olds hiking in Switzerland and 65 year olds who are done with overnight flights. For most people, though, the window for big, ambitious travel runs 10 to 15 years, not 40. The data in When Can You Make Work Optional? The Three Clocks That Should Drive the Decision shows spending dropping roughly 23% between the early and middle retirement years, mostly in travel, dining, and entertainment.

If you're planning a Hybrid Retirement, our phased approach where full-time work gives way to flexible, optional work, that window can open even earlier. You step back in your mid 50s, pick up consulting or fractional work, and your calendar finally opens up. You can take 4 weeks in the spring and still have a client project waiting when you get home. This video on hybrid retirement for executives shows how that works.

Start by sitting down with your spouse and putting real ages on it. When do the big trips happen, and when do you expect things to slow down?

I like to ask clients this: if your health changed at 70, what would you regret not doing before then? A spreadsheet can tell you whether the money is there. It can't tell you whether your knees, your back, or your patience for airports will still be there.

Next, price the whole window instead of a single year. Say you want 10 go-go years at $70,000 a year. That's $700,000. Then 10 slow-go years at $35,000, and $15,000 a year after that.

Seen that way, you stop asking whether a trip is too expensive and start asking whether the whole travel chapter fits your plan. That's a question you can actually answer.

This is where Life Driven Investing (LDI) comes in, our framework that builds the portfolio backward from your life. We organize your money into 4 liquidity bands:

• 0 to 2 years: Current needs.
• 3 to 5 years: Short term goals.
• 6 to 10 years: Mid term goals.
• 10+ years: Long term goals.

If you're just entering retirement, your go-go travel fund likely lives in the first 3 bands. The next 2 years of trips sit in cash and short term reserves. Years 3 through 10 are invested based on when you'll spend them, more conservative for near term trips and more growth oriented for the ones further out.

So when the market drops 20%, you're not selling stocks to pay a cruise deposit. The trip is already funded, and your long term money stays invested. This video on investing through volatile markets shows the bands in practice.

This is how you tell a safe travel budget from one that's quietly threatening your plan. Ask 3 questions:

1. Does the higher spending have an end date?
2. Is it set aside in its own bands, separate from your core lifestyle?
3. After you set it aside, does the rest of your money still cover your core lifestyle for life using conservative assumptions?

If the answer to all 3 is yes, book the trip. If the plan only works when markets beat the average, that's a yellow flag. If travel has slowly become a permanent part of your lifestyle with no end in sight, that may be a real risk.

A temporary increase in travel can be very responsible. A permanent increase nobody planned for is how good plans get in trouble. If things get tight, you don't cancel next spring's trip. You adjust the slow-go years, which may still be a decade away.

A trip in retirement costs money, and it also affects your taxes. Fund a big travel year with a large IRA withdrawal and all of it counts as taxable income. Medicare looks back 2 years at your income when it sets your Part B and Part D premiums, so a big withdrawal at 63 can raise what you pay at 65.

The better move is to decide where the travel money comes from before the year starts. In many plans, the go-go years land in the lower income years before Social Security and required minimum distributions begin. That can be a good time to pay for travel from cash and your taxable account, and use the room in your tax bracket for Roth conversions. Same trips, less lifetime tax.

Chris is 56 and spent the last decade as a VP of sales at a software company. Ellen is 55. Chris planned to leave the full time role and consult for 5 years, bringing in around $110,000 a year. Their core lifestyle, not counting travel, runs about $120,000 a year, and they'll start Social Security at 67.

We mapped their window: big trips while Chris consults from 56 to 65, a slower pace from 66 to 75, and lighter travel after that. Then we priced and funded it:

The $700,000 for the go-go years was earmarked across the first 3 bands.

With conservative return assumptions, their core lifestyle was still covered for life, and the plan still projected more than $2 million at 95 in today's dollars. What surprised them most: over their whole lifetime, the new plan spends only about $150,000 more than their $30,000 a year plan would have. The difference is that it spends the money when they'll actually enjoy it.

Ellen said the hardest part was letting go of the guilt. Once the number was modeled and funded, it stopped feeling like a splurge. It just felt like the plan. If guilt shows up for you too, Oversaving Might Be Your Biggest Expense is worth a read.

A big travel number isn't what breaks a retirement plan. An untested number is. Too low, and you give up trips during the only years you can fully enjoy them. Too loose, and travel quietly becomes a permanent part of your lifestyle. A travel budget with an end date, funded in its own bands, is a very different thing from a raise you gave yourself forever.

• Before: You pick a travel number because it feels safe. You can't say where it came from, and you carry a little guilt whenever you book something big.
• After: You know your travel window, you've priced the whole chapter, and each phase is funded in its own liquidity band. You've run the safety test, you know which account pays, and you book the trip with confidence.

This is written for corporate executives and senior leaders in their 40s and 50s, with household income of $500,000 or more, who are planning to step back from corporate work in the next few years and want their travel plans built into the numbers, not bolted on afterward.

At Tailored Wealth, we build your travel chapter into a living plan next to your core lifestyle, taxes, and Social Security timing. Then we fund each phase in the right liquidity band, so your trips are pre-funded and your long term money stays invested.

Our Quarterly Strategy Rhythm, the review cadence where we revisit your plan every quarter, keeps it current as markets, health, and goals change.

If you want to know what your travel number really is and how to fund it alongside the rest of your life, book a Free Wealth Strategy Call. It is a low-friction conversation about your plan, your travel goals, and your timeline, not a sales pitch.