Many retirees dream of taking advantage of their new free time to travel the world and see all the places that felt out of reach during their working years. It's a beautiful dream, but one that doesn't come cheap.
Vacation costs have been rising as the pandemic wanes. Airfares rose 17.4% from winter to spring 2022 and are only expected to rise further for spring 2023, according to a ValuePenguin study. With inflation persisting, travel is only going to get more expensive in the near future.
This doesn't mean you should put your dreams on hold in the hopes of lower prices to come, though. Let's look at four ways retirees can minimize the cost of travel so they can live their dream retirement and have money left in the bank, too.
Travel credit cards
When used responsibly, credit cards can be a great tool for stretching your dollars, especially when those credit cards come with rewards. Travel credit cards are rewards cards that let you earn points or airline miles as you spend, which can then be used to help cover the costs of your vacations. You can even find credit cards for Airbnbs if you prefer to stay in vacation rentals rather than hotels.
Travel credit cards can also give you access to travel extras, such as free checked bags, priority boarding, discounts on in-flight purchases and travel insurance.
There are a few things to keep in mind to help you choose the best travel credit card for you:
- Rewards categories: Travel rewards credit cards can have different rewards tiers depending on where you spend. For instance, one card may pay four points for every dollar you spend at restaurants but only one point at grocery stores. Look for a travel credit card that aligns with your spending habits so you can rack up points quickly.
- Branded versus general-purpose: There are two types of travel credit cards: branded credit cards that are tied to a specific airline or hotel company and general-purpose travel credit cards that provide rewards that can be used across companies. If you're loyal to a specific airline or hotel, you may want to use that company's branded credit card. Otherwise, the flexibility of a general-purpose credit card may be better.
- Travel partners: Even general-purpose travel credit cards can have partnerships with specific airlines or hotels where your rewards will go further. Be sure to check what, if any, travel partners are tied to a travel credit card before signing up.
- Annual fees: Travel credit cards can have annual fees that are upwards of $500. Make sure you'll get enough benefit from the credit card to offset its annual fee, or find a travel credit card with no annual fee.
- Sign-up bonus: It never hurts to get a little extra bonus on top of your rewards. Credit card companies often use sign-up bonuses, such as extra points if you spend a certain amount in the first few months of having your credit card or no annual fee for your first year, to entice you to sign up. Just remember that a one-time bonus doesn't negate the long-term costs of an annual fee.
Senior citizen discounts
One of the privileges of becoming a senior citizen is senior citizen discounts. Restaurants and entertainment venues often provide discounts to seniors, but even airlines may provide discounts for senior travelers that go beyond just extra time to board. Look for senior fares when shopping for tickets.
Note that the age qualification may vary. Some places might consider anyone age 55 or older a senior citizen, while others will make you wait until you turn 65 to reap the benefits of senior citizen discounts. In either case, it never hurts to ask about senior discounts, as taking advantage of these can help you keep a little extra money in your pocket.
Consider vacation rentals
One of the biggest questions when traveling is where to stay. Hotels offer convenience and the benefit of a concierge staff that can often help you find your way around new surroundings. However, vacation rentals like Airbnbs can sometimes be more cost-effective, especially if you find one that lets you cook more meals at home. You may also be able to sleep more people in an Airbnb than a hotel.
While the right lodging largely depends on personal preference and location, hotels are often better cost-wise for shorter stays since Airbnbs tack on cleaning fees. That said, it still behooves you to shop around before committing to one or the other.
Group travel
If you don't mind sharing your vacation with others, senior group travel can be a cost-effective and fun way to explore new areas. Group tours can use their larger size to access discounted prices on travel, and as an added bonus, they often come with guided tours.
Some travel groups for retirees to consider include AARP tours, Adventures Abroad, ElderTreks and Evergreen Club, which has a network of bed-and-breakfast homestays.
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Maxime Rieman is Product Manager at ValuePenguin. Educating and assisting shoppers about financial products has been Rieman's focus, which led her to joining ValuePenguin, a consumer research and advice company based in New York. Previously, she was product marketing director at CoverWallet and launched the personal insurance team at NerdWallet.