Saving For Retirement So That You Can Travel & Dine Out

I wanted to address this phrase of “Traveling in Retirement” because it comes up frequently when the topic of retirement comes up. I have been asked quite a bit if my early retirement situation has budget room for traveling.

The premise is that most households want to secure enough assets for the time they are retired so that they have discretionary income to spend on fun things such as traveling. It’s not just traveling, they may want to dine at fancy restaurants or enjoy expensive wine, etc.

There is the assumption that one works hard now in order to enjoy those aspects of life in the future. I appreciate the point that in our youth we have a lot more energy to work hard and earn a solid income and might as well take advantage of it.

Let’s talk about these supposed budgets that people have in mind which urges them to want to save mass amounts of wealth in order to afford it in the future.

Budgeting For Fine Dining In Retirement

I am well aware of restaurants where a tasting menu can cost $1,200, I have Netflix. I actually don’t think that’s a waste of money. It seems more worthwhile to spend $1,200 occasionally for a meal in the 99th percentile of quality and taste than spending around $1,500 every month on dining out, eating meals which are less healthy and even mediocre.

Even the biggest foodie household couldn’t possibly stomach a new tasting menu once a week… I guess they could but that stuff is quite heavy. And I’m not sure how enjoyable fine dining is when you have it every few days, seems to me that it would lose its luster.

Let’s say the couple wanted to save enough for the to only eat out, never having to deal with cooking at home, again. I get that, it’s fun and it’s an adventure and in a way, it’s supporting the local entrepreneurs. But again, I wonder, how long can you do that for before you run out of new dishes to try, new restaurants to eat at?

I would hate to see any reader here becoming that typical rich snobby couple who goes from restaurant to restaurant talking down to the wait staff, sending back food and just becoming overly critical of what really is an art form for the chef but also a means of income.

It might sound like I am trying to talk a foodie couple out of fine dining – not at all. I just want to do a thought experiment with any such reader in order to price the value of this opportunity. Would you want to dine out nearly every day? And if you did, how many weeks, months, years could you keep it up before your health will be adversely affected? Or how long do you think it will take before you get bored with it?

Let’s get back to this shortly. Now, I want to talk about traveling.

Budgeting For Travelling In Retirement

Traveling is mentioned much more often than fine dining, perhaps it’s easier for many to relate to. It seems that one of the ways individuals can truly feel wealthy is when they can spend as much money and time on traveling as desired.

I am picturing my friends who are big into travel and I can’t imagine too many of them being able to travel full-time – at least not for longer than a few months or a couple of years, tops. I could see them taking off a few months a year to go places but the rest of the time they would rather be near their family and friends, closer to their kids and the comfort of their home.

Those who wish to have another residence in another country or locale to escape to during the harsh winters or scorching summers, they don’t really fall into the travel category. They would simply rent/purchase a second home and live out of 2 main places – that isn’t really time or money intensive.

Wanting To And Actually Doing It

There is a sense of comfort in knowing that we could do something if we wanted to. I, for example, have made sure that I can earn my income while being location independent. Both my investments and my work can generate an income regardless of where I live.

If someone wants the ability to have a lot of income and time in the future in order to travel endlessly then they may have to give up quite a lot of their free time and peace of mind in their youth in order to secure that. It’s important to know for sure if that’s what someone wants in their future because it’s a very resource intensive goal.

Taking a year off to try it out might even be worthwhile when you’re young. If you really love it and can see yourself doing it on a larger scale then start planning for it.

Securing Enough Money for Such An Endeavor

But let’s play that out. A family of 4, 2 young kids, both physicians who are working full-time. They will certainly make a lot of money together, at least $500,000/year. Their goal is to have so much passive income coming in that one day they can travel and dine out to their heart’s pleasure.

Perpetual travel and fancy tasting menus can easily cost in the $10,000/month range. On top of that expense, the household would need money to pay for their overhead they left behind in their home country. So, let’s say $15,000/month, after tax, to be on the safe side.

They would need a gross income of $300k/year in order to afford that kind of lifestyle. With that much income they should be able to spend their $15,000/month without having to worry much about inflation, taxes, economic fluctuations, currency exchange rates, etc.

With $8,000,000 invested, it should be very doable to generate that $15,000/month. But to save $8 million would mean that the couple would have to earn somewhere in the $13,000,000 range because they would have to pay taxes on the income first, before being able to save it.

There isn’t enough room in retirement accounts to reach that $8,000,000 unless the couple waits well into their 70’s and maybe even 80’s before traveling and dining out full-time. That’s why $13 million is what needs to be earned.

Assuming that the couple pays off their student loans and then starts saving by age 35, they would need to save and invest about $20,000/month for 25 years which means that they would be able to break free sometime in their early 50’s.

Will The Time And Money Be Worth It?

To save that ~$8 million, the couple would set aside $20k/month for 2.5 decades. However, they still would have another $8-10k/month to live off of. So they likely still traveled and dined out in those 25 years. They weren’t missing out on the experience – not really necessary to wait until retirement to experience fine dining or to travel. The question I wonder about is whether they will actually make fine dining and traveling a full-time endeavor after having dabbled in it for so long?

The reality will likely be that they will do it for 6 months, maybe 1 year and recognize that some of the wonderful experiences they had overseas comes at a cost. Sitting through TSA lines, crowded airplanes and dealing with hotel and travel bookings.

What do you guys think? Do you think that it’s more likely that couples who are really into dining out and traveling will do it as a full-time endeavor? I am curious what the readers are planning for their own discretionary spending in the future.

Splitting The Difference

I could picture a scenario where the couple would save up enough, let’s say $100k to splurge on traveling and eating out for a year. They would go all out and not worry about anything.

Instead of saving $8 million in order to do something that they may not do indefinitely, they could save a fraction of that and either have more time to enjoy their leisure time or work less and have more time to dine out and take trips while they are younger.

Fortunately, physicians have the kind of careers which are easy to get out of and back into. Not all professions allow for this due to seniority, tenure, rapidly changing technology, or agism. Should a couple or a person save enough to sustain their basic household expenses and realize that they really want to splurge on traveling, it wouldn’t be difficult to get back in the game and save the necessary funds for it.

The Reason For This Post

The financial industry has intentionally put a veil on the entire retirement system by creating such complex retirement vehicles that it has forced the public to err excessively on the safe side due to fear.

I don’t like placing blame on “them”. Nobody is oppressing physicians – we have enough income, education, and life experience that we can circumvent the path that’s advertised to us and carve out our own.

Few physicians are greedy. They are hardworking and have truly sacrificed a large portion of their life for their career. We don’t want to see all our hard work amounting to nothing come retirement time. Above all, we want to construct a sound retirement plan for us and our loved ones. Beyond that, we have some delayed gratification issues which many of us want to quench.

There is a fine line between fear of retirement failure and ignoring the idea of retirement right up until we have no choice but to face it. The line is not only finer but getting more complicated. These are the questions which I hope the reader ponders and I will touch on ad nauseam on this site:

1. What does retirement mean to you?
2. How much income do you need/want every month in retirement?
3. How will you generate the income you need to live off of in retirement?
4. How do you anticipate your investments generating you actual cash in your retirement?
5. How would you live your life differently if you had enough in your retirement savings today?