Packing a suitcase full of belongings and travelling the world, taking up new opportunities and experiences might be something you perhaps associate with those in their late teens or early twenties. But who’s to say that stepping away from the normality of everyday life and taking a bold new adventure is only for those in their younger years? Let’s look at being retired and wanting to travel the world.
Those aged 55 and above might now be more open to taking a break away from life and travelling the world. In fact, 41% of those in retirement believe it’s worth spending their cash on travel, with 32% admitting they wish to travel more of the world. [1.1]
Travelling with friends, family or solo travelling in later life could be used as a great escape from a busy schedule, or a means to inject some excitement and stimulation. Travelling also offers the opportunity to enrich your mind, reset and focus on your wellbeing, giving you a chance to recharge.
Travel the world – Facts
In fact, studies show that almost four in 10 [1.2] over 60’s are now choosing to take the plunge, and book not only one trip of a lifetime, but to plan a whole itinerary of new destinations. Those in later life may now possibly be more adventurous than ever – but what adventures might they currently have at the top of their list? In 2022, Yahoo life conducted a survey of 1,500 Brits ultimate holiday experiences. The results show what people deemed an ultimate holiday experience and what percentage of the group would include it as an ultimate experience. [1.3]
Independent Financial Advice
Retirement planning involves critical financial decisions that can significantly impact your future. Whether you’re exploring pensions, annuities, equity release, or other retirement products, independent financial advice is essential.
- A trip to the Northern Lights (55%)
- Walking through the wild countryside of New Zealand (33%)
- Eating pasta on the Amalfi coast (31%)
- A drink on the beach in the Caribbean (26%)
- Island hopping in Greece (27%)
- Going on a safari (22%)
- Visiting a rainforest (17%)
- Enjoying the best burgers in New York City (14%)
- Finding and eating the best burger in New York (14%)
- Volcano hiking in Iceland – (14%)
- Seeing the Golden Triangle in Thailand – (12%)
- Visiting the Louvre in Paris -(12%)
- Climbing Machu Picchu, Peru – (11%)
- Wine tasting in Napa Valley, California – (11%)
- Horseback riding through the Australian rainforest – (10%)
- Surfing in Hawaii – (10%)
- Star spotting in Los Angeles – (9%)
- Scuba diving at the Great Barrier reef, Australia – (9%)
- River rafting in Arizona – (6%)
- Windsurfing at Lake Garda, Italy – (6%)
- Canyoneering at Zion National Park, America – (5%)
Travel the World – Which Countries?
The same group of people were asked what there top-rated must visit countries were. Below you can what countries the group chose along with what percentage agreed to it being a top visit country.
- Australia (38%)
- New Zealand (37%)
- Canada (31%)
- Italy (29%)
- America (29%)
- Maldives (23%)
- Hawaii (23%)
- Iceland (22%)
With so many activities and countries to be ticked off the potential bucket list, it’s no wonder those in later life might choose to march on a new adventure.
Using equity release (lifetime mortgages) to fund travel
A lifetime mortgage is the most popular type of equity release. It is a loan that is secured against a homeowners’ property. Typically, the minimum amount that is taken is £10,000, and they are available to homeowners aged over 55. Unlike a regular mortgage, a lifetime mortgage requires no monthly repayments, and instead homeowners can simply let the interest roll up.
Alternatively, if homeowners wish to, they can make monthly or ad hoc interest payments.
Lifetime mortgages have a fixed interest rate for life, which means it will not change for the duration of your loan.
Interest is charged on a compounding basis, which means that interest is charged on the loan amount plus any interest already added.
This can be quite complex to understand and we advise that you seek independent advice regarding this subject.
Alternatives to Equity Release
There are several alternatives to consider:
Downsizing is one option, where you sell your current home and move to a smaller, less expensive property, freeing up cash in the process.
Renting out a room or property can provide a steady income stream.
If you’re of pension age, you might be able to take advantage of pension drawdowns or annuities.
Another option could be to take out a secured loan or mortgage, although this would require making regular repayments.
You can also look at government benefits or grants that may be available for certain individuals, particularly those with low incomes or specific needs.
Whatever you consider, it is important to carefully consider all options and seek professional advice before making any decision.
The Negative Reputation of Equity Release
Equity release has historically carried a negative reputation due to misconceptions and past practices. Some of the concerns include:
Compound Interest
Lifetime mortgages accrue compound interest, which means the debt grows over time. Critics argue that this can significantly reduce the inheritance left for beneficiaries.
Property Value Erosion
As interest accumulates, it can erode the value of the property. Homeowners may end up owing more than the property is worth, especially if house prices stagnate or decline.
Means-Tested Benefits
Releasing equity can impact eligibility for means-tested benefits, such as pension credit or housing benefit. It’s essential to consider these implications.
Things to consider - Travel the World
Travel writer Kathryn Burrington suggests those in later life should consider taking or getting the following:
- All necessary vaccinations for the country of choice, you can view all travel vaccinations on the NHS website. https://www.nhs.uk/conditions/travel-vaccinations/jabs/
- Google translate to help navigate any language barriers.
- Consider a medical alert bracelet for those who suffer from illnesses such as diabetes, asthma, severe allergies and heart conditions. The bracelet allows medics to understand what health conditions you have if you are unable to respond.
- Sunlight/UV protection [3]
Those going on any extended holidays (30+ days), will likely be required to inform their insurance provider, otherwise, their policy may become invalid. Long trips may require homeowners to consider unoccupied property insurance, which could cover your home for longer periods.
Seek Independent Advice
If you are a retired persons contemplating fundraising from their property. You must recognise the significance of seeking independent advice. To help navigate this complex financial landscape effectively.
Whether considering downsizing, equity release, renting out property, or considering one of the other alternatives to equity release. Retired people like you must weigh the benefits and risks of each option in light of their individual circumstances and goals.
Independent advisers play a crucial role in providing retirees like you with the expertise, perspective, and guidance. Providing you with the balanced and unbiased information needed to help you make informed decisions, and help you secure your financial well-being in retirement.
By leveraging independent advice, you can confidently navigate the process of raising funds from your property. But there are no guarantees that you will be able to do so. Everything is subject to your personal circumstances.
