How Do You Finance Dream Retirement Tours Around the World?

Imagine this: you wake up to the sounds of waves crashing against the Greek island coast, have your coffee in a cafe in Paris, or see the sunrise over Machu Picchu. Retirement, to most of us, does not mean slowing down; instead, it means the end game of getting to explore the world we have always wished to visit.

The question here is, however, the million-dollar question (literally): how can you finance this globetrotting retirement life? The positive message is that your dream can become a reality with intelligent planning and the right strategies. We will look at how you can make it work in practice.

Get Started Planning Earlier Than You Think

The key to funding a lively retirement is actually not much of a secret; it is simply a question of how early you start. Although retirement may seem decades away, the effect of compound interest implies that money invested today can grow exponentially over time.

You can consider your retirement fund as a snowball traveling down the hill. The sooner you begin, the larger it will be by the time you get to the bottom. When you are in your 30s or 40s, you are in the right place to accumulate a lot of wealth to make your travel dreams come true. However, even with retirement age in sight, there is no need to worry, as there are still many options for increasing your traveling fund.

Make the most of your superannuation payments

Your retirement investment, namely superannuation, is likely to be your largest asset and therefore deserves serious consideration. On top of the amount that your employer is required to contribute, you might want to make additional voluntary contributions to your retirement.

One such effective method is through salary sacrificing: you redirect some part of your pre-tax earnings to super, thus minimizing your taxable earnings while you are accumulating your retirement nest egg. Furthermore, your super contributions are usually taxed at only 15%, which is most likely lower than your marginal tax rate.

Should you wish to have a greater degree of control over your investments in a retirement fund, then you can utilize the services of a specialty SMSF broker to set up a self-managed super fund. This will provide you with the flexibility to make investment choices that match your retirement travel ambitions, but it will also carry with it extra responsibilities.

Investment Portfolio Diversification

Do not put all your eggs in one basket—or all your traveling money in one kind of investment. A diversified portfolio can help secure your retirement money and may also produce good returns.

Consider a combination of assets such as shares, property, bonds, and other alternative investments. Other retirees even venture into precious metals to diversify and hedge against market volatility. Whether it's physical gold, silver, or any other precious metal you are interested in (acquired via a company such as Melbourne Gold Company or other reputable dealers), these physical assets can provide an extra security level to your portfolio.

It is all a matter of balancing your risk tolerance, time frame, and financial goals. You may want to become more conservative in your investing as you approach retirement in order to preserve your capital.

Develop Multiple Sources of Income

Superannuation alone may not be sufficient to finance an adventurous retirement. This is why smart future travelers tend to create more than one stream of income.

This could include:

• Rental income from investment properties.

• Shares that pay dividends.

• A side business or freelance work that you can continue doing (or do at any time, even when you are traveling).

• Royalties from creative work or intellectual property.

The good thing about multiple income streams is that they provide more flexibility and stability. When one source underperforms, you can rely on the others.

Pay Off Your Debt Before You Retire

Herein lies a reality check: it is difficult to afford to travel around the world when you are still paying off a mortgage or have credit card debt. Reducing debt should be one of your priorities during the years before you retire, as it can free up a great deal of money for travel.

Pay off your high-interest debt first, then your mortgage. Retiring with no debt means that you will have income to use on experiences instead of paying interest. Think of the additional month in Europe you could have with the money you would have been paying on your mortgage!

A case in point is Geographic Arbitrage

Why keep an expensive home base when you are traveling? A lot of adventurous retirees practice geographic arbitrage, spending time in countries where their retirement income will go further.

Southeast Asia, some parts of South America, and certain countries in Europe provide an excellent standard of living at a fraction of the price you would pay in the big cities of Australia. You could spend three months in Thailand, then three months in Portugal, and then spend the remaining part of the year in other locations. This plan will enable you to live a lot longer on your retirement savings and have fantastic experiences.

Keep Learning and Adjusting

The road to a good pension is not paved. Markets evolve, life situations change, and new opportunities arise. Keep yourself involved in your financial planning, check your plan every now and then, and do not be afraid to make corrections.

Think about using the services of a financial advisor who will learn about your travel plans and be able to help you develop your strategy. They can assist you in navigating tax, withdrawal plans, and investment decisions that will support your wanderlust retirement.

Your Adventure Awaits

To fund a retirement that is spent on world traveling, one needs planning, discipline, and sound financial choices. But it's far from impossible. You can make your travel dreams come true by starting early, saving as much as possible, diversifying your investments, and thinking creatively about how to spend your retirement life.

The world is big and beautiful, with experiences that are waiting to be explored. Retirement doesn’t have to be boring, as long as you have the financial base to make the most of it.

How are you financing your dream retirement? Are you beginning to plan your retirement travels? You can leave your comments and concerns below—tell us about your retirement dreams!