How will I cope with travel costs after retirement?

Church of Our Lady before Tyn in Prague (that is not the view from my balcony!)

I am typing this post on a balcony in Prague, in the Czech Republic. On a balmy summer evening. How cool is that?

Oh, and after returning from a scrumptious dinner at a Michelin star restaurant, La Boheme Degustation. Needless to say, the meal was not inexpensive.

Lettuce heart with raspberry powder and a slice of lard – one of my dishes from La Boheme Degustation

This got me thinking …

How I currently fund my travels

I save for my travels in two separate accounts  – one that I use for ‘spending money’ while I am overseas and one for serious costs such as airfares and accommodation.

The account for spending money does not accrue great interest.  But it has no foreign exchange fees and comes with a debit card that can be loaded with different currencies. So I only transfer money on a weekly basis here when I have imminent travel coming up and while I am travelling. I work out approximately how much I need for the holidays and start automating weekly transfers accordingly.

The second account (which is really my travel account) does accrue good interest. I transfer a weekly amount irrespective if I have anything planned. So it is replenished constantly. And ready for my next lot of travels, whenever it may be.

This account is non negotiable – that is how important travel is to me. I don’t want my finances to prevent me from travelling whenever I feel like it. Just as I always have a valid passport. Sure, my work schedule may prevent me from travelling at the drop of a hat. But I don’t want to, ever, be constrained by my lack of funds.

What happens now when I am on holidays?

Generally, by the time I leave the country, I will have already paid for the expensive items such as flights and accommodation plus any pre booked events. I only need money for food, transport and sight seeing expenses while I am travelling. This money then comes out of my spending account. Which is funded. So I don’t draw any money from my usual everyday account while I am on holidays.

While I am away, my everyday account will continue to perform as per usual ie automated weekly deductions to the emergency fund, investment account etc will continue uninterrupted. And any bills that are direct debited from this account or my credit card will also continue as per usual.

Most importantly, my weekly pay cheque will continue to be deposited into this account while I am on holidays.

That’s correct – I get four weeks paid leave per year. I have never done unpaid leave before. If I travel for more than four weeks, it means I did not use up my leave entitlements the year before. Or I have long service leave available.

After I return from my travels

Any money left over in the spending account will be transferred to my emergency fund.

And that weekly amount I was depositing into this account will now be available for the emergency fund which is very close to funding 6 months of expenses.

So … when I retire …

What happens when I retire? That is, I will not have any consistent income like a pay cheque. Yes, I may have the odd dividend arriving from my shares portfolio but that is hardly consistent at the moment. Hopefully, my shares portfolio will grow to a bigger pie by the time I retire in the next decade.

But the question remains – how will I feel if I cannot replenish what I have spent?

I know intellectually, that my nest egg should provide for me – I will not retire unless I have a certain amount saved up. And whether I use the 4% rule or be more conservative and use 3% or 3.5% – that is all conjecture at the moment.

And I have budgeted overseas travel in my plans. I only travel every second year now but I can envision myself travelling every year if I don’t have work commitments.

But psychologically, how will I cope? I can justify spending money (within reason) now, knowing very well that I am still getting paid while on holidays. And that I have a job to return to which means more incoming pay cheques.

So I find myself pondering this …

Should I travel as much as I can now, while I can spend $250 on a dinner, knowing that I can replace it? And while I am in good  health and can walk happily for miles? 

Maybe I should focus on the expensive routes and cities (that’s you, Scandinavia & western Europe & dare I dream it – Antartica?) while I’m working. And leave Asia and South America until I retire.

Maybe I should have my fill of Michelin star restaurants now. And what about cooking lessons? But I have always dreamed about cooking in Tuscany or Provence – join one of those insanely expensive tours where you stay in a magnificent historical house in the countryside and cook and eat.

Will I still want to travel or will I not enjoy travelling as much if I cannot spend money on experiences that I value? If I have to question every expense, justify every dollar …

Needs and wants change …

Perhaps I am worrying needlessly. After all, what I think I want when I retire may not be what I want when I do finally retire.

For example, on this holiday when I was in London with my niece, I was much happier spending time with her than gallivanting about town, attending shows and eating at trendy restaurants. Which is absolutely what I would have indulged in if my niece were not available. And it was what I did on previous visits before she was born. I did do those things on this trip, just not as much as I did on previous trips.

So who knows … I may tire of eating at overseas Michelin star restaurants; I may give up that dream of joining a culinary tour to Tuscany or Provence; maybe the need to visit Antartica will fade …

After all, I cut out my daily takeaway cappuccinos when the need arose. Perhaps travel experiences will be not be any different.

And there may be new dreams – like spending each summer with my niece or exploring mini retirements

Sigh …. I think my FI date just got pushed further away …

Final thoughts

Am I over thinking this? Maybe. But it’s best to think out scenarios and prepare for them. At least, anticipate that there may be a problem.

And start thinking about how I would react or respond. And perhaps explore if some other contingency plans can be forged.

 

How about you? Do you have an expensive hobby that you worry you may not be able to fund once you retire? Am I thinking this all wrong?

 

 

 

A taste of mini retirement

I love that feeling of being in the clouds where earthly troubles seem far away

Ah, what bliss!

Ten days into my five and a half weeks holiday, I stop counting. The days roll into one another. The most pressing thing on my mind is where I’ll spend the day and then the meals I’ll enjoy.

I start to wonder – is this a taste of a mini retirement?

I am not specifically taking a mini retirement right now – a lot more planning is involved than what I have done for this trip. From what I understand it to be, a mini retirement is a planned break from your career and you are best to set a time frame and goals for it.  It is not just a holiday.

But the idea is now very intriguing.

I have never considered taking a mini retirement before. Because I started my FI journey later than most, my goal is to reach FI and hopefully retire earlyish within the next 10 years. So taking a mini retirement seems pointless as it will delay my final goal of retirement needlessly.

However, right now in my life journey, after saying goodbye to a stressful work situation, the idea of spending time away from work is very appealing.

How is this trip different from other holidays?

Of course I have been on holidays before, but this is my first overseas trip since pursuing FI.

I wrote about my first domestic holiday after starting my FI journey here –  there was an internal struggle between wanting to do it all and holding back due to the expenses. All the time thinking at the back of my mind – can I do this cheaper?

Because that was an expensive holiday, I was wracked with guilt.

Not remorse.

I loved all my experiences of being in Uluru and that dinner under the stars was just sensational.

Since then, I am learning to balance frugality with living with intention and letting go of guilt and expectations.

It is ok to spend money on what I value.

Bearing that in mind, I have scheduled in a few dinners at pricier restaurants in each city I’m visiting. As culinary adventures are my thing. And I do pay to attend any exhibitions I’m interested in or entrance fees into certain tourist sites and cooking lessons (um … those culinary adventures again!)

Where I have saved money is by using Qantas points for my major flights. I am staying in flats in London, Prague and Budapest instead of hotels. I eat street food whenever possible. And make some meals myself, buying ingredients from local supermarkets (or have been eating with family in London) instead of eating out at every meal. Or I eat a big meal, for example a decadent afternoon tea at The Savoy – which was my lunch and dinner for the day.

I use ING Direct’s debit card to withdraw cash in local currency or pay for online bookings or so I don’t pay foreign exchange fees.

I am conscious of what I am spending but I am not letting money be a deterrent if I want to experience something I value.

Having time to just be …

I am a multi tasker – I like to have lots of things on the go all the time. Unless I am physically or emotionally spent from work – then I just flop on the couch in a comatose state.

Even while on holidays, I like to cram in as many activities as I can. So I don’t waste the opportunity to explore a new city and experience its culture and food. It usually takes many hours from Australia to visit anywhere so time is precious at my destinations.

This holiday however, I have tried very hard not to schedule too many planned activities – besides deciding the general neighbourhood of where I’d like to be on any given day.

What I really need on this holiday is rest and rejuvenation.

So how am I doing?

I am sitting in a one bedroom flat in London overlooking a beautiful tree lined streets as I write this. It is less than a 10 minute walk to my brother’s flat.

Over the past week, I have spent more than 12 hours a day with my little niece – a time that I will always treasure. It has been awesome, watching her learn new skills such as cycling for the first time.

There are new arts and craft projects every day – making jellyfish and lobster from toilet rolls and pipe cleaners one day; painting ceramics another day. We practise reading and writing; adding and subtraction.

All this in between visiting the dinosaurs and whales at the Natural History Museum; looking at the planets at the Science Museum. Having paper aeroplane competitions. Making apple crumble and cookies.

I love her endless curiosity – she is going through the ‘why’ stage. Her enthusiasm for simple pleasures like watching a street performer ‘blowing’ the biggest bubbles is infectious.

Before arriving in London, I had a 2 day stopover in Hong Kong. I indulged in street food, walked from one charming village to another on Lamma Island (a little island about a 30 minute ferry ride from Hong Kong island) and learnt how to make dim sum from a local chef.

Look what I learnt to make in Hong Kong – rice rolls

Plus I am finally reading Work Optional by Tanya Hester – it’s been on my bedside table since February.

So it has been a perfect start to a holiday where I have time for myself and time with my family. I am looking forward to more weeks like this.

Moving forward …

Maybe I should consider having a longer break every year, not just the customary 4 weeks every full time worker is entitled to in Australia. We are also very lucky in that we are entitled to long service leave of 12 weeks every 7 to 10 years with the one employer depending on our industry. I have about five weeks accrued at this stage.

My brother and sister in law work demanding jobs. I have dealt with countless women with young children in my job. The guilt of these mums  and the pressure they are under to leave on time to pick up children in day care etc is real. While I don’t have children myself,  I understand the feeling of being torn – I have witnessed it often enough in my colleagues and friends.

I am considering offering to help them over the summer holiday period, even if it’s only for 4 weeks. If I can somehow organise a more economical accommodation option, I could extend that to more than 4 weeks. I do have 5 weeks of long service leave up my sleeve.

Yes, my journey to FI and retiring earlyish will be delayed.

But the privilege of spending time and sharing some of my niece’s days is priceless. And so rewarding.

Final thoughts

The idea of an 8 week break every year is very tantalising. I may not be able to name it as a mini retirement but hey, what’s in a name? I am going to let this idea sit and simmer and see where it leads.

And continue my saving goals – there is no harm in having as many options as possible. Which really is the whole point of being financially independent.

Are you planning a mini retirement? Are you slowing down to FI?