The One Thing You Must Do Before You Travel Forever

Why you should care about planning for retirement if you plan to travel forever.

For many of us traveling the world as young adults, nothing could be further from our minds than retirement (that big adult-sounding word reminiscent of the 9-5 office life you’re trying to escape). After all, there’s plenty of time for responsible adulthood later, and we need every penny we have now to see the world!

I hate to say it, but while retirement may seem too far away to think about, unless you plan to die young (not recommended!) it makes sense to think about one day getting old.

There is a lot more to planning for retirement than I’ll get into here, but just  first simple step of beginning has given me peace of mind to travel knowing that I’m not being completely reckless with my finances.

Time is also on your side the earlier you start. For Americans under 50, the maximum contribution you can make to an IRA account annually is $5,500, which means waiting until you’re older to start means less money to spend in old age when you may need it (which, I’ll admit, is a horribly sobering thought when you’re in your 20’s!).

For those who (understandably!) have never given any thought to retirement until now, here’s an ultra-simplified guide to getting started.

How to travel forever like an adult

Why ruin a good time later when a few simple steps can get you on track for a comfortable living in old age?

Before You Leave Home

Start by assessing what you have. 

It’s a hard truth, but sometimes you need money to make money. The good news is that it doesn’t take much, and the more you’re willing to contribute upfront, the easier things will be for you down the line.

Say you have $3,000 saved up for your round-the-world adventure, which already isn’t much. Can you spare a $1000 of that? Or even $500?

My instinctive answer and probably yours is no, but I would be wrong. Putting money out of your own reach (but knowing you still have it!) is one of the best ways to force you to get creative about the resources that are left.

If you had a third less money than you had originally planned, what would you do differently? Could you work for free board at hostels? Could you eat in restaurants less and cook more? Are there ways to make money while you’re traveling, like bartending or waiting tables?

Start a retirement account.

Nothing has ever made me feel more un-cool than saying this, but it’s an absolutely necessary step to planning your permanent vacation. It gives you the freedom to travel for as long as you want without running the risk of being broke in old age.

Start by familiarizing yourself with the different types of retirement accounts available to you (e.g. IRA vs. Roth IRA). Use whatever resources you have at your fingertips, especially getting advice from more successful adults you know like parents and relatives.

Alternately, you can walk into an investment bank and ask to speak to someone about planning for retirement. Having a financial advisor to help you plan for retirement usually costs money, but most will offer free consultations if you’re not sure where to even begin.

(Note: If you currently have a job) Before you ‘stick it to the man‘, know that in the US, you can only contribute to an IRA from earned income. That means money you made recently and are paying taxes on. For most people, that means having a job (renting out your apartment on AirBnB usually doesn’t count) but there are exceptions like self-employment and alimony (Source: IRS). Also, if you had a job but quit within the last year, you may still be able to use those earnings to contribute to a retirement account until April of the following tax year.

Have an investment account. 

Let’s say you just graduated from college, or for whatever reason don’t have any taxable income yet. That’s not an excuse to put off starting a plan for retirement until you’re ready for a “real job.”

The last thing you should do with money you’re trying to save is to stash it somewhere it can’t grow (e.g. under a mattress). The bare minimum and safest choice is to put it into either a.) a savings account that pays interest, or b.) a CD (certificates of deposit) which locks up your money for a certain amount of time while giving you a set interest rate over the period.

However, interest rates have been low for some time and it’s not the best place to grow your money; what interest you do earn will likely get wiped out by inflation. Luckily, you can invest your money with a brokerage even without a retirement account.

This option is not for the lazy. Do your research and only consider this option if you have interest in the stock market. Ideally, you want to find a brokerage that charges no minimum balance to start or maintain an account. Another thing you should consider when choosing a broker is how much they’ll charge you to actually make trades (for example, Fidelity Investments charges $7.99 for every transaction – e.g. when buying X shares of Y Company).

Robinhood is an app I use personally that took the investment world by storm in the last couple years by being the first brokerage to not charge any commissions on trades. Now anyone in the world can have access to the stock markets even if all they can afford to trade on are “penny stocks” (stocks worth less than $5).

Planning for retirement so you can travel forever

Don’t let the sun set on planning for retirement! It’s not a sexy topic, but you may thank yourself for it later!

On The Road 

Play by the books. 

Nothing could be more of a buzzkill to the adventure of a lifetime than thinking about taxes. It’s tempting to think that the money you make doing odd jobs while traveling are invisible dollars you’ll probably turn around and spend on Bintang with your Bali buddies, but you can’t add money to your retirement accounts if the government doesn’t know you made any (see what the IRS has to say about taxpayers living abroad).

Ok, you’ve paid those taxes. (Save your grumbling, it’s all part of being an adult!) That’s just to qualify. How you want to contribute to that account is up to you. Once you have enough earned income (think of it as permission to fund your IRA) anybody can deposit money into that account.

Say every year, grandpa and grandma sends you $100 for your birthday. What if that $100 (which, in cash and folded up in a card at your parent’s house is doing nothing for you now) could be deposited straight into your retirement account? You won’t miss what you never had, and now you have money to invest for your future.

The same goes for any other recurring sources of income you may have. Be creative about setting up ways to get money into your account without it going through your hands so it won’t feel like a loss when you can’t spend it.

Develop a strategy.

How you get money into your account depends on your personal situation, but that money won’t grow without you doing something about it. This is the tricky part. There is no surefire way to grow your investment (or everyone in finance would be out of a job!) but there are resources on the Internet for those interested in getting better at it.

For most people, the best strategy I can suggest is Warren Buffett’s advice for individual investors (that’s you!)  to invest in low-cost, broad-based mutual funds. Think of a mutual fund as a bunch of your buddies (or thousands of them that you don’t know) pooling your money so that instead of each of you buying a handful of different products (i.e. stocks), you can be partially invested in many different ones, while sharing the cost of paying a professional to manage it all.

A fund with a “broad-based” strategy might be concentrated in a specific industry (e.g. pharmaceuticals, industrials) but invests in many companies within that industry, and therefore offers the most diversified portfolio the everyday individual investor has access to. In my opinion, this is the best strategy for young people who don’t want to spend too much time thinking about how to invest their retirement money.

For those who want more direct control over their investments, a diverse portfolio with at least a few dividend-paying stocks from established companies (think Coke or Ford, who aren’t likely to fold anytime soon) is also a solid choice. If you really don’t know where to start, you may want to consider engaging a financial adviser to help you get started.

Set it, but don’t forget it. 

Once you’ve put the money in your account to use (by investing it) you can leave it alone while you travel, but should keep trying to contribute to it wherever you can.

It may help to set yourself a budget, like saving $5 a week to deposit at the end of the month (that’s just $20!) and then thinking of ways to get that money, which could mean finding ways to spend less, or making a few bucks while on the road.

You can obviously contribute as much or as little as you think you can afford, but keep in mind that you can live on a lot less now as a young person, than when you’re older and may not have the option (or desire!) to stay in the most seedy budget hostels.

When You Get Back

Ramp up your contributions. 

Assuming there’s a point where you have a regular income again (whether that means you’ve come home to get a job, stayed to work abroad, your blog is finally raking in dollars, etc.), try to start contributing the maximum amount to your IRA as quickly as possible (remember, that’s just $5,500/year or $458/month!).

Again, nobody is putting a gun to your head to save for retirement, but you may thank yourself for it down the line.

Monitor and rebalance regularly.

While it’s tempting to make a few investments then never see or touch the account again until retirement, investing is inherently risky. Make a habit of checking your account at least once a year to see how it’s doing (and take action if your money is not growing fast enough or at all), and keep contributing as much as you can afford.

As a reward for getting through this not-so-fun post about being a responsible adult (blergh!) here’s a silly picture of me monkeying around in Kuala Lumpur!


What financial advice would you give someone who’s embarking on long-term travel? Please feel free to share in the comment section below!

3 thoughts on “The One Thing You Must Do Before You Travel Forever

    • Steph says:

      I’m so glad to hear that Sammy, your comment made my day! Let me know if you have any questions, I’m happy to help any way I can! (Also added a bit more to the “Develop a strategy” section that might be more helpful than what I had up there before!)

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