People love to travel. Whether it's trying to climb Mount Everest, meditating in a temple in India, or luxuriating on a Hawaiian beach, these vacations are what dreams are made of. So it's no surprise that 67% of the U.S. workforce dreams of traveling once they stop working.
If you're a woman, travel is even higher on your bucket list. Women, in general, make 70% to 80% of travel decisions, whether they're married, single, or traveling with friends.
It might sound silly to think about circumnavigating the world during your senior years while you're only in your 20s and have 40 to 50 years of work ahead of you, but it's not: The earlier you begin saving for retirement, the more money you'll accumulate. And the more money you accumulate by the time you retire, the easier it will be to visit the destinations of your choice in the most comfortable ways possible.
If you have the travel bug and know it will only grow as the years proceed, here are four moves to make now that can almost guarantee you can journey anywhere without worrying about the price, once you stop working.
Image source: Getty Images.
1. Start saving now
I'm sure you've heard it before, but I'm going to tell you again: Start saving now. You have a minimum of two goals for stashing your money away: creating a rainy day or emergency account, and creating an investing account (more on that below).
Financial advisors generally suggest having three to six months of living expenses in a liquid account with a bank or brokerage. This money is for those unexpected developments, such as a serious repair of your car or home, or any other unforeseen event that you hadn't accounted for -- like losing your job.
2. Pay off student debt
You probably had a great time in college -- but now it's time to pay for it. And that might be a thorn in your side that can painfully poke you for a lifetime if you don't take it seriously. Don't believe me? Well, there's a gentleman in the U.K. who is 90 and still paying off his student loans. Now that is pain.
The first step is to figure out how much of your salary you can devote toward paying down those loans. Armed with that info, you can start paying down the loans with the highest interest rate first. Once those are handled, target federal loans, which generally have lower interest rates.
Look into programs that offer loan forgiveness. If you're willing to do public service or teach for a few years, you might be able to have your loans reduced or canceled altogether. Also keep an eye on Washington and the success of the politicians who are trying to lighten up the load for people carrying student loan debt.
3. Time to invest
Investing is key if you want the comfy retirement that will enable you to travel whenever and wherever you want to. That's thanks to the power of compounding.
For example, if you're 25 and put $100 into an index fund that tracks the S&P 500, and continue putting in $100 a month for 40 years, you'll have $408,600 at the age of 65. (That's assuming the long-term S&P 500 average return of about 9% and no withdrawals on your part.) And if you put it into a Roth IRA, you won't pay taxes on any investment returns you accumulate. That's a lot of moola that will take you to exotic places near and far.
4. Make a budget
This one could hurt the most because it involves something that's elusive to many: discipline. But by doing so, you'll be able to track how much money is coming in and going out.
A budget will also be a guide to how much you can afford to put into your emergency fund and investment accounts. (And don't forget to include having fun in your budget as well.) The key here is that you must follow your plan -- not just write it down and stick it in a drawer.
According to a survey by Capital Group, a financial services company, 40% of retired people say they spend more on travel than anticipated. You can avoid becoming part of that statistic by anticipating that travel will be a big-ticket item once you retire.
Start accumulating the funds now so that in the future, you won't have to think twice about it. If you do, it's possible that you'll be on that first-class cruise around the world -- in about 40 years or so!
