Do you like to travel? Are you already looking forward to your next big trip? Do you spend more time planning your vacations than planning your finances? If so, you’re not alone. Recent surveys suggest that many Americans devote more time each year to planning their vacations than planning their finances.
I’m here to discuss your travel plans, but I’ll spare you the guilt trip. Travel should be a top priority, your budget should reflect that priority, and you should spend time dreaming about your next trip.
In its Annual Retirement Survey, the Transamerica Center for Retirement Studies (TCRS) asks Americans about their biggest dreams and fears for retirement. Travel consistently ranks among the top priorities, alongside “spending time with family and friends.” The 21st edition of the survey, conducted amid widespread COVID-19 lockdowns in late 2020, suggests that cabin fever was already spreading, too. Travel took the top spot, with 65% of participants calling it a top priority.
Why is travel so important?
Travel can be fun, of course, but it offers so much more: new and exciting experiences, sights, cultures, cuisines, activities, and ideas; physical and emotional engagement; new connections and shared memories; and an escape from the stress and anxiety of everyday life.
According to the Global Coalition on Aging (GCOA), travel might even offer better health and longer life. In its white paper Destination Healthy Aging, the coalition shares evidence that travel offers health benefits. For instance, women who travel regularly are much less likely to suffer from depression and face lower risks of heart attack or coronary death. For men, regular travel was associated with lower risk of death overall and much lower risk of death from heart disease. Travel also provides the sort of social and intellectual engagement associated with lower risks of dementia. “Novel and complex stimuli, such as new behaviors and new environments, promote brain health by building brain resilience at the cellular level, thus potentially delaying the onset of degenerative disease.” The paper adds, “those who engage in more leisure activities such as travel are generally healthier and report greater satisfaction in their lives.”
If we dream of traveling more, and if traveling can improve our health and happiness, what stands in our way? The TCRS survey suggests that financial fears pose the biggest threat to our dreams of travel. Among survey participants, the top four retirement fears all include a financial component:
- Outliving savings and investments (42%)
- Declining health that requires long-term care (39%)
- Social Security being reduced or ceasing to exist in the future (38%)
- Possible long-term care costs (34%)
Guilt can derail our travel plans, too. Because we tend to think of vacations as a luxury or a privilege, travel expenses are often the first to face scrutiny. Overbudget on the bathroom remodel? Let’s cut the beach week to a beach weekend. Unexpected car repairs? We’ll ski Snowshoe instead of Snowmass. Bear market? Forget the Serengeti; we’ll leave our trash can out overnight and watch a wildlife migration at home.
If a vacation seemed selfish at the beginning of the pandemic, the guilt may be gone after two years of isolation and postponed plans. “Revenge travel” has been a buzzword for a few months, and I recently witnessed the phenomenon firsthand. Standing among spring break crowds at Disney World, I realized I am both a victim and a perpetrator of the revenge travel trend.
Even if the trend subsides, it highlights a shift in social sentiment that began at least a decade ago. The GCOA reports on a 2012 survey that concluded “American leisure travelers believe vacations are a necessary practice, and 82% believe they need a vacation as much or even more during tough economic times.” In 2013, TCRS observed that “nearly half (47%) of Americans agree that travel is so pleasurable and important to them that it is not a luxury but a necessity.”
We shouldn’t pretend that all travel expenses are strictly necessary, but neither is all travel frivolous. For all its benefits, travel should be a high priority.
Travel can help you learn, grow, and thrive. Budgeting is important, but it doesn’t have to be an exercise in austerity. If you dream of traveling more, we can help. Here are some questions to start the conversation with your financial advisor:
- How much travel is necessary for your health and happiness?
- What is the least travel you can tolerate?
- What is the most travel you can afford?
- How much of your income should you budget for traveling now?
- Is traveling today more or less important to you than traveling later in life?
- How much do you need to save to achieve your travel goals in retirement?
- Should your travel budget adjust up or down based on investment returns?
- Would a market downturn affect your plans to travel extensively over the next X years?
- How might declining health or mobility affect your travel plans as you age?
Investing in happiness
In recent years, the study of behavioral finance has emerged at the intersection of psychology and economics. The growing body of knowledge offers fascinating insights into the ways we think and feel about money and the many biases that affect our financial decisions. If you’d like to buy more happiness with each dollar in your travel budget, I highly recommend the following books:
- Dollars and Sense: How We Misthink Money and How to Spend Smarter (Dan Ariely, Jeff Kreisler, 2017)
- Happy Money: The Science of Smarter Spending (Elizabeth Dunn, Michael Norton, 2013)
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