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How to plan dream holiday in retirement

Journalist: Rachel Wait, Freelance

ended 18. September 2024

Looking for expert comments on how retirees can save for their dream holiday, including:

- intro commentary
- creating a budget, setting a savings goal
- planning ahead - don't rush to book, think about how long it will take to save and make use of advance discounts / travelling off season etc.
- Set a holiday budget – think about everything from accommodation to food to travelling etc
- Open a dedicated savings account. 
- Consider using rewards, whether that’s a credit card with travel incentives, loyalty cards or other schemes.
- Don’t forget about wider retirement – it's important to not let the holiday get in the way of a long-term plan.
 

3 responses from the Newspage community

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Ross Lacey
Director & Independent Financial Adviser at Fairview Financial Management
Travel and holidays in retirement are very common objectives on the wishlist for the clients we deal with.

They've often got places and things on their bucket list they want to do while they have the health, time and money to do it.

We call this the "golden window" as although life expectancy may be longer now than previous generations, health is likely to deteriorate as we get older so it's important to spend the early years of retirement wisely.

We advise setting a specific holiday budget each year so that any other living costs are accounted for elsewhere, and this can truly be spent on holidays and travel without worry.

In our experience though, retireers can often hold back spending in the early years of retirement through fear of running out of money. There's a phychological shift change in become a spender rather than a saver. Couple this with a stock-market crash in the same year as retirement, and it can mean retirees are left feeling they may have made a mistake.
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Joshua Gerstler
Chartered Financial Planner at The Orchard Practice
When you finally start your retirement, it can be tempting to splash out and go on all the holidays you have been dreaming about. And so you should! You have probably spent many years working hard to be able to do just that. However, don't go spending huge amounts before looking at your expected cashflow for the rest of your retirement (and therefore the rest of your life). When we, The Orchard Practice, plan for the future, we always make the lifetime cashflow a key part of this. It is easy to look at your pension pot and see a huge amount of money, but remember that normally this has to last you for the rest of your lives. If you have been planning for your retirement for a while, then you will now exactly how much money you can spend on your dream holidays, and hopefully have included contingencies for things that might occur later on, such as care fees.
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Alastair Hoyne
CEO, Finanze Capital at Finanze Capital
For a dream holiday you have time so use that to your advantage, book in advance and use a deal, book away from school holidays to avoid the surcharges and busy times.
When it comes to large one-off expenses in retirement your focus should be on your income surplus, existing savings and access to invested funds. Make sure you maintain an emergency fund and additional cash reserve in retirement, if your holiday budget is eating into either of these then consider bolstering them or reducing the cost of the holiday.
How much to have in emergency fund? 3-6 months of expenses. For cash reserve? This is harder to answer – do you foresee a large home maintenance bill, medical costs or anything else? If yes, then these need to be accounted for. Add your monthly income surplus into the mix and you will have an idea of what you can afford.
Speak to your financial advisor to plan effectively.